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HomeMy WebLinkAbout2008/02/05 Item 9 CITY COUNCIL AGENDA STATEMENT ~f:.. CIIT OF :: (HULA VISTA FEBRUARY 5, 2008, Item q SUBMITTED BY: REVIEWED BY: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA IMPLEMENTING THE PRE-TAX PAYROLL DEDUCTION PLAN FOR CALPERS SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14) DIRECTOR OF HUMj~.N RESOURCES ;rT2-- CITY MANAGER I JI1AL- ASSISTANT CI~ANAGER s:I ITEM TITLE: 4/5THS VOTE: YES D NO 0 BACKGROUND On April 22, 1997, the City Council approved a Resolution providing qualified members the option to elect the pre-tax payroll deduction plan for their service credit purchase (i.e., redeposit, service prior to membership, military, etc.). On December 27, 2007, CalPERS assigned a new group coverage number for the City's Miscellaneous group with 3% @ 60 benefit formula from group number 70001 to 70002. In order to continue the benefit of pre- tax option to its Miscellaneous employees with coverage group 70002, the City must submit an amended resolution to California Public Employees' Retirement System (CalPERS). RECOMMENDATION Council adopt the Resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION Under Internal Revenue Code (IRC) section 414(h)(2), a qualified CalPERS member may be eligible to purchase additional service credits for the time served in: (1) active military duty, Peace Corp, etc.; (2) work in a CalPERS-covered employer before becoming a CalPERS member; and (3) a qualified leave of absence. Qualified members may choose to pay for this service credit in lump sum payment, installment payments, combination of partial lump sum payment and installment payments or rollover/transfers. In order to offer 9-1 FEBRUARY 5, 2008, Iteml Page 2 of2 pre-tax payroll deductions, the City filed a resolution in 1997 with CalPERS to participate in the Pre-Tax Payroll Deduction for service credit purchases. On April 22, 1997, the City Council approved a Resolution No. 18634, providing qualified members the option to elect the pre-tax payroll deduction plan for their service credit purchase. California Public Employees' Retirement System (CaIPERS) approving the City's application for ail employees reported under coverage groups 70001 (Miscellaneous), 74001 (Fire Safety) and 75001 (Police Safety). On December 27, 2000, CaIPERS assigned an additional group coverage number 70002 for the Miscellaneous group with 3% @ 60 benefit formula. In order to continue the benefit of pre-tax option to group 70002, the City must submit an amended resolution to CaIPERS. DECISION MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot rule found in California Code of Regulations section I 8704.2(a)(1) is not applicable to this decision. FISCAL IMPACT There is no direct fiscal impact to the City. All service credits are purchased by member employees. There may be minimal reductions in City liability for Medicare taxes due to the reduced taxable income base afforded by this pre-tax benefit. ATTACHMENT (I) PERS Employer Pickup Resolution for Pre-Tax Payroll Deduction Plan for Service Credit Purchases (2) City Resolution No. 18634 Prepared by: Edith Quicho. Benefits Manager 9-2 Return to CafPERS . Unit 830 Employer code: 0195 EMPLOYER PICKUP RESOLUTION PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14) WHEREAS, the Board of Administration of the California Public Employees' Retirement System (CaIPERS) at the April 1996 meeting approved a pre-tax payroll deduction plan for service credit purchases under Internal Revenue Code (IRC) section 414(h)(2); and WHEREAS, the City of Chula Vista {Employer} has the authority to implement the provisions of IRC section 414(h)(2) and has determined that even though implementation Is not required by law, the tax benefit offered by this section should be provided to those employees who are members of CaIPERS; and WHEREAS, the City of Chula Vista {Employer} elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS Coverage Group(s): (Membership Coverage Group(s)) All Miscellaneous and All Police and Fire Safety Members NOW, THEREFORE, BE IT RESOLVED: I. That the City of Chula Vista {Employer} will implement the provisions of IRC section 414(h)(2) by making employee contributions for service credit purchases pursuant to the Califomia State Government Code on behalf of its employees who are members of CalPERS and who have made a binding irrevocable election to participate in the pre-tax payroll deduction plan. "Employee contributions" shall mean those contributions reported to CaiPERS which are deducted from the salary of employees and are credited to individual employee accounts for service credit purchases, thereby resulting in tax deferral of employee contributions. II. That the contributions made by the City of Chula Vista {Employer} to CaIPERS, although designated as empioyee contributions, are being paid by the City of Chula Vista {Employer} in lieu of contributions by the employees who are members of CaIPERS. 9-3 1/1. That the employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Chula Vista {Employer} to CaIPERS. IV. That the City of Chula Vista {Employer} shall pay to CalPERS the contributions designated as employee contributions from the same source of funds as used in paying salary, thereby resulting in tax deferral of employee contributions. V. That the effective date for commencement of the pre-tax payroll deduction plan cannot be any earlier than the date the completed resolution is received and approved by CaIPERS. VI. That the governing body of the City of Chula Vista {Employer} shall participate in and adhere to requirements and restrictions of the pre-tax payroll deduction plan by reporting pre-tax payroll deductions when authorized by CalPERS for those employees of the above stated Coverage Group(s) who have elected to participate in this plan. PASSED AND ADOPTED by the governing body of the City of Chula Vista {Employer} this 5th day of February, 2008. {year} BY (Signature of Official) (Title of Official) RETURN ADDRESS: City of Chula Vista Human Resources Department 276 Fourth Avenue Chula Vista, CA 91910 ************************************************************************************************************************ FOR CALPERS USE ONLY Pre-tax payroll deduction plan effective date: Approved By: Title: MEMBER SERVICES DIVISION, Service credit section-Unit 830 9-4 ".. RESOLUTION NO. 18634 RESOLUTION OF THE CITY OF CHULA VISTA IMPLEMENTING A PRE-TAX PAYROLL DEDUCTION PLAN FOR CALPERS SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14) WHEREAS. the Board of Administration of the California Public Employees' Retirement System (CaIPERSl. at the April 1996 meeting, approved a pre-tax payroll deduction plan for service credit purchases under Internal Revenue Code (IRC) Section 414(h)(2); and WHEREAS, the City of Chula Vista has the authority to implement the .provisions of IRC Section 414(h)(2) and has determined that even though implementation is not required by law, the tax benefit offered by this section should be provided to those employees who are members of CaIPERS; and WHEREAS. the City of Chula Vista elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS coverage group(s): Miscellaneous (70001); Fire/EMT (74001); and Police (75001). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CHULA VISTA AS FOLLOWS: ,.. 1. The City of Chula Vista will implement the provisions of IRC Section 414(h)(2) by making employee contributions for service credit purchases pursuant to the California State Government Code on behalf of its employees who are members of CalPERS and who have made a binding irrevocable election to participate in the pre-tax payroll deduction plan. "Employee contributions" shall mean those contributions reported to CalPERS which are deducted from the salary of employees are credited to individual employee accounts for service credit purchases thereby resulting in a tax deferral of employee contributions. 2. The contributions made by the City of Chula Vista to CaIPERS, although designated as employee contributions, are being paid by the City of Chula Vista in lieu of contributions by the employees who are members of CaIPERS. 3. The employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Chula Vista to CalPERS. 4. The City of Chula Vista shall pay to CalPERS the contributions designated as employee contributions from the same source of funds as used in paying salary, thereby resulting in a tax deferral of employee contributions. 5. The effective date for commencement of the pre-tax payroll deduction plan cannot be any earlier than July 1. 1996, or the date the completed resolution is received and approved in CaIPERS. whichever is later. 6. The governing body of the City of Chula Vista shall participate in and adhere to requirements and restrictions of the pre-tax payroll deduction plan by reporting pre-tax payroll deductions when authorized by CalPERS for those employees of the above stated Coverage Groups who have elected to participate in this plan. i'-\""I 9 S n Resolution 18634 Page 2 Presented by . Approved as to form JLLf.'~~ Teri Enos Risk Manager ...--/ ( k;1~ /<!-c-Q ~ Kaheny; 0 Attorney ~'------, IHi . 1 ,-. - - Resolution 18634 Page 3 'T PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California, this 22nd day of April, 1997, by the following vote: AYES: Councilmembers: Moot, Padilla, Rindone, Salas, and Horton NAYES: Councilmembers: None ABSENT: Councilmembers: None ABSTAIN: Councilmembers: None ~M/'r MttZno S Irley Horton, Mayor ATTEST: r c&m.O fl a,7I.J,L Beverly :i Authelet, City Clerk STATE OF CALIFORNIA COUNTY OF SAN DIEGO ss. CITY OF CHULA VISTA I, Beverly A. Authelet, City Clerk of the City of Chula Vista, California, do hereby certify that the foregoing Resolution No. 18634 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 22nd day of April, 1997. Executed this 22nd day of April, 1997. ''',ALw'4 () ill rAtA Beverly A. fO.uthelet. City Clerk r . 9 7 I ~ RESOLUTION NO. 2008- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA IMPLEMENTING THE PRE-TAX PAYROLL DEDUCTION PLAN FOR CALPERS SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14) WHEREAS, the Board of Administration of the California Public Employees' Retirement System [CaIPERS], at the April 1996 meeting, approved a pre-tax payroll deduction plan for service credit purchases under Internal Revenue Code [IRC] section 4l4(h)(2); and WHEREAS, the City ofChula Vista has the authority to implement the provisions of IRC section 4l4(h)(2) and has determined that even though implementation is not required by law, the tax benefit offered by this section should be provided to those employees who are members of CalPERS; and WHEREAS, the City of Chula Vista elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS coverage group(s): Miscellaneous (70001); Fire/EMT (74001); and Police (75001). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CHULA VISTA AS FOLLOWS: 1. The City of Chula Vista will implement the provisions of IRC section 4l4(h)(2) by making employee contributions for service credit purchases pursuant to the California State Government Code on behalf of its employees who are members of CalPERS and who have made a binding irrevocable election to participate in the pre-tax payroll deduction plan. "Employee contributions" shall mean those contributions reported to CalPERS which are deducted from the salary of employees are credited to individual employee accounts for service credit purchases thereby resulting in a tax deferral of employee contributions. 2. The contributions made by the City of Chula Vista to CaIPERS, although designated as employee contributions, are being paid by the City of Chula Vista in lieu of contributions by the employees who are members of CaIPERS. 3. The employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Chula Vista to CaIPERS. 4. The City of Chula Vista shall pay to CaIPERS the contributions designated as employee contributions from the same source of funds as used in paying salary, thereby resulting in a tax deferral of employee contributions. J:\Allomey\RESQ\BENEFITS\Pre-Tall Payroll DedUClion forCalPERS Service Cnldig=Ia-02-0S-0S.Z.dOC Resolution No. 2008- Page 2 5. The effective date for commencement of the pre-tax payroll deduction plan cannot be any earlier than July I, 1996, or the date the completed resolution is received and approved in CalPERS, whichever is later. 6. The governing body of the City of Chula Vista shall participate in and adhere to requirements and restrictions of the pre-tax payroll deduction plan by reporting pre-tax payroll deductions when authorized by CalPERS for those employees of the above stated Coverage Groups who have elected to participate in this plan. Presented by: Approved as to form by: ~~\~~(~~ Ann Moore ' City Attorney Marcia Raskin Human Resources Director l:\Attomey\RESO\BENEFITS\Pre_Tax Payroll Deduction for CalPERS Service Credit PUJ'l::hs OZ-05-08.2.doc 9-[