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-[