HomeMy WebLinkAbout2008-12-23 CC Agenda Item No.12 (2) CI TY Qfi
LA E 5 LSINORE
D REAM EXTREME,
REPORT TO CITY COUNCIL
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: ROBERT A. BRADY
CITY MANAGER
DATE: DECEMBER 23, 2008
SUBJECT: CALPERS EMPLOYER PICKUP RESOLUTION FOR PRE -TAX
DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES
Background
Employees of the City of Lake Elsinore are covered by the California Public Employees'
Retirement System (CaIPERS). Employees earn service credit for each year or partial
year they work for a CaIPERS- covered employer. In some cases, employees may be
able to purchase additional service credit that can help them maximize their retirement
benefits. Currently, there are no City employees purchasing additional service credit,
however, there has been several inquiries regarding available options. This resolution
would allow additional service credit purchases to be treated as a pre -tax payroll
deduction under Internal Revenue Code (IRC) section 414(h)(2).
Discussion
A resolution must be approved by the City Council and a copy sent to CaIPERS to
authorize the pre -tax deduction plan for service credit purchases.
Fiscal Impact
There is no fiscal impact.
Recommendations
It is recommended that City Council adopt the attached resolution for the pre -tax
deduction plan for service credit purchases.
Agenda Item No. 12
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Resolution for CaIPERS Pre -Tax Deduction Plan
December 23, 2008
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Prepared by: James R. Riley OM
Acting Director of inistrative Services
Approved by: Robert A. Brady
City Manager
Agenda Item No. 12
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RESOLUTION NO. 2008-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
ELSINORE ADOPTING A 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 Lake Elsinore 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 Lake Elsinore elects to participate in the pre -tax
deduction plan for all employees in the following Calpers Coverage groups:
70004 Miscellaneous
NOW, THEREFORE, THE CITY COUNCIL OF LAKE ELSINORE DOES
HEREBY RESOLVE:
I. That the City of Lake Elsinore 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 CaIPERS 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 Lake Elsinore to CaIPERS,
although designated as employee contributions, are being paid by the City
of Lake Elsinore in lieu of contributions by the employees who are
members of CaIPERS.
III. 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
Lake Elsinore to CaIPERS.
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Agenda Item No. 12
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IV. That the City of Lake Elsinore shall pay to CaIPERS 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 Lake Elsinore 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
CaIPERS for those employees of the above stated Coverage Groups(s)
who have elected to participate in this plan.
PASSED, APPROVED AND ADOPTED this 23 day of December, 2008 by the
following vote:
ROBERT E. MAGEE, MAYOR
CITY OF LAKE ELSINORE
ATTEST
CAROL COWLEY, INTERIM CITY CLERK
CITY OF LAKE ELSINORE
APPROVED AS TO FORM:
BARBARA LEIBOLD, CITY ATTORNEY
CITY OF LAKE ELSINORE
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Agenda Item No. 12
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