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HomeMy WebLinkAboutResolution 96-68 - CALPERS Pre-Tax Payroll Deduction Plan fo CITY OF HUNTINGTON BEACH - MEETING DATE: May 19, 2003 DEPARTMENT ID NUMBER: AS-03-19 Council/Agency Meeting Held: -7 Deferred/Continued to: '(pproved LJ Conditionally Approved LJ Denied City Clerk's Sigp(ai—ture Council Meeting Date: May 19, 2003 Department ID Number: CITY OF HUNTINGTON BEACH REQUEST FOR ACTION LD N) SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL SUBMITTED BY: RAY SILVER, City Administrator o?r,,.O PREPARED BY: CLAY MARTIN, Director of Administrative Services ­/V SUBJECT: ADOPT RESOLUTION AUTHORIZING EMPLOYE S TO PAY PERS MEMBER CONTRIBUTIONS WITH PRE-TAX DOLLARS IStatement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: By Memorandum of Understanding (MOU) provision, beginning July 5, 2003, safety employees in the Police Officers' Association (POA), Police Management Association (PMA), Marine Safety Officers' Association (MSOA) and the Huntington Beach Firefighters' Association (HBFA) will pay a share of the required employee contribution rate for retirement benefits with the California Public Employees' Retirement System (CaIPERS). Through this CalPERS-required resolution, member contributions will be taken pre-tax, thus deferring state and federal income taxes. Funding Source: There is no fiscal impact to this action. Recommended Action: Adopt Resolution No. 3, a resolution of the City Council of the City of Huntington Beach authorizing employees to pay member contributions for PERS retirement with their Pre-Tax dollars. Alternative Action(s)': Deduct the employee contribution from earnings after State and Federal taxes. Analysis: Currently By MOU provisions, the City of Huntington Beach pays the employee contribution to CaIPERS (9% of salary for safety members). Beginning July 5, 2003 safety members of the POA, PMA, MSOA and HBFA will pay 2.25% of the employee rate. The Internal Revenue Service allows deferral of federal and state taxes on the employee's contribution to CalPERS until the time of distribution of pension funds. P:\RCA\Pre-tax PERS contribution.doc 2'- 5/2/2003 4:25 PM REQUEST FOR ACTION MEETING DATE: May 19, 2003 DEPARTMENT ID NUMBER: AS-03-19 Environmental Status: Not applicable Attachment(s): City Clerk's Page Number No. Description 1 Resolution No.-?, RCA Author: S. Hennegen P:\RCA\Pre-tax PERS contribution.doc 5/2/2003 4:25 PM oZ ATTACHMENT # 1 i RESOLUTION NO. 2003-32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING EMPLOYEES TO PAY MEMBER CONTRIBUTIONS FOR PERS RETIREMENT WITH THEIR PRE-TAX DOLLARS WHEREAS, the City of Huntington Beach has the authority to implement the provisions of Section 414(h)(2) of the Internal Revenue Code (IRC); and The Board of Administration of the Public Employees' Retirement System adopted its resolution re Section 414(h)(2) IRC on September 18, 1985; and The Internal Revenue Service has stated in December 1985,that the implementation of the provisions of Section 414(h)(2) IRC pursuant to the Resolution of the Board of Administration would satisfy the legal requirements of Section 414(h)(2) IRC; and The City Council of the City of Huntington Beach has determined that even though the implementation of the provisions of Section 414(h)(2)IRC is not required by law, the tax benefit offered by Section 414(h)(2) IRC should be provided to its employees who are members of the Public Employees' Retirement System, NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: 1. That the City of Huntington Beach will implement the provisions of Section 414(h)(2) of the Internal Revenue Code by making employee contributions pursuant to California Government Code Section 20691 to the Public Employees' Retirement System on behalf of its employees who are members of the Public Employees' Retirement System. "Employee contributions" shall mean those contributions to the Public Employees' Retirement System which are deducted from the salary of employees and are credited to individual employee's accounts pursuant to California Government Code Section 20691. 2. That the contributions made by the City of Huntington Beach to the Public Employees' Retirement System, although designated as employee contributions, are being paid by the City of Huntington Beach in.lieu of contributions by the employees who are members of the Public Employees' Retirement System. 3. That employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City of Huntington Beach to the Public Employees' Retirement System. 4. That the City of Huntington Beach shall pay to the Public Employees' Retirement System the contributions designated as employee contributions from the same source of funds as used in paying salary. 03reso/pre tax PERS/4/18/03 1 S. That the amount of the contributions designated as employee contributions and paid by the City of Huntington Beach to the Public Employees' Retirement System on behalf of an employee shall be the entire contribution required of the employee by the Public Employees' Retirement Law(California Government Code Sections 20000, et seq.). .6. That the contributions designated as employee contributions made by the-City of Huntington Beach to the Public Employees' Retirement System shall be treated for all purposes, other than taxation, in the same way that member contributions are treated by the Public Employees' Retirement System. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 19th day of May 2003. ATTEST: City Clerk Mayor REVIEWED AND APPROVED: APPROVED AS TO FORM: City Admiltstrator JC ty Attorney 1� QI/ �,�� INITIATED P D: Director of dministrative Services 03reso/pre tax PERS/4/18/03 2 Res. No. 2003-32 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 19th day of May 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California RCA ROUTING SHEET INITIATING DEPARTMENT: Administrative Services SUBJECT: Authorization for Employees to pay PERS Member Contributions with Pre-Tax Dollars COUNCIL MEETING DATE: May 19, 2003 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff Assistant City Administrator(Initial) ( ) City Administrator(Initial) C? City Clerk ( ) E EXPLANATION FOR RETURN OF ITEM: (BelowOnly) RCA Author: S. Hennegen (9) May 19, 2003 -Councogency Agenda - Page 9 E. CONSENT CALENDAR All matters listed on the Consent Calendar are considered by the City Council and Redevelopment Agency to be routine and will be enacted by one motion in the form listed. Recommended Action: Approve all items on the Consent Calendar by affirmative roll call vote. E-1. (City Council/Redevelopment Agency) Minutes (120.65) -Approve and adopt the minutes of the City Council/Redevelopment Agency regular meetings of February 18, 2003 and City Council Adjourned Regular Meeting of February 21, 2003 as written and on file in the Office of the City Clerk. Submitted by the City Clerk. Approved and Adopted 7-0 E-2. (City Council) Accept Resignation of Sandy Stahlecker and Approve Appointment of Susie Jones to the Community Services Commission with Term to Expire June 30, 2004 ( . ) - 1. Accept the resignation of Sandy Stahlecker; and 2. Approve the appointment of Susie Jones to the Community Services Commission as a representative of the Fountain Valley School District for a term to expire June 30, 2004, as recommended by Council Liaisons Mayor Pro Tern Cathy Green and Councilmember Dave Sullivan. Submitted by Community Services Director. Funding Source: Not applicable. Mayor Pro Tem Green announced the School District made recommendation. Approved 7-0 E-3. (City Council) Adopt Resolution No. 2003-35 Authorizing Closure of Local Streets for the Fourth of July Parade and Adopt Resolution No. 2003-36 Authorizing Closure of Pacific Coast Highway for the Fourth of July Parade ( . ) - 1. Adopt Resolution No. 2003-35- "A Resolution of the City Council of the City of Huntington Beach Authorizing Street Closure for the Fourth of July,"and 2. Adopt Resolution No. 2003-36 - "A Resolution of the City Council of the City of Huntington Beach Requesting Caltrans Approve the Closing of Pacific Coast Highway for the Huntington Beach Fourth of July Parade." Submitted by Community Services Director. Funding Source: Not applicable. (Resolution No. 2003-35 includes the list of streets for the parade/run routes and parade formation areas.) Adopted 7-0 E-4. (City Council) Adopt Resolution No. 2003-32 Authorizing Safety Employees: (1.) Police Officers' Association (PON: (2.) Police Management Association (PMA); (3.) Marine Safetv Officers' Association (MSOA); and (4.) Huntington Beach Firefighters' Association (HBFA) to Pay California Public Employee's Retirement System (CaIPERS) Member Contributions with Pre-Tax Dollars Effective July 5, 2003 ( ) Adopt Resolution No. 2003-32 — "A Resolution of the City of Huntington Beach Authorizing Employees to Pay Member Contributions for PERS Retirement with Their Pre-Tax Dollars." Submitted by Administrative Services Director. Funding Source: There is no fiscal impact to this action. (The Internal Revenue Service allows deferral of federal and state taxes on the employee's contribution to CalPERS until the time of distribution of pension funds.) Adopted 7-0 Timon, Sue From: Brockway, Connie Sent: Monday, June 09, 2003 9:27 AM To: Timon, Sue Cc: Hennegen, Sharon Subject: FW: resolution from May 19, 2003 Sue, Will you locate Resolution No. 2003-32 (Item E-4 on the 5/19/03 Agenda. Most likely on Rebecca's desk in the Res file folder. Will you certify it and send to Sharon. Thanks. Connie -----Original Message----- From: Hennegen,Sharon Sent: Monday,June 09,2003 8:59 AM To: Brockway,Connie Subject: resolution from May 19,2003 Good morning Connie, When you have a chance, could you have one of your staff forward to me a certified copy of the resolution entitled, "....authorizing employees to pay member contributions for PIERS retirement with their Pre-Tax dollars". I need to send the copy to PERS. Let me know if you have any questions. thanks Sharon 1 I� Council/Agency Meeting Held: Deferred/Continued to: frApproved ❑ Conditionally Approved ❑ Denied City Clerk's Si tune 7-0 Council Meeting Date: AUGUST 19, 1996 Department ID Number: AS 96-036 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: MICHAEL T. UBERUAGA, City Administrator PREPARED BY: ROBERT J. FRANZ, Deputy City Administra SUBJECT: CALPERS PRE-TAX PAYROLL DEDUCTION PLAN FO SERVIC CREDIT PURCHASES '�R � , 94-6 g Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: To allow the City to offer its employees, who opt to participate, the benefit of deferring income tax liability on CalPERS member service credit purchases. Funding Source: No Impact Recommended Action: Approve Resolution No. ( which meets the requirements under CalPERS to extend the pick-up of CalPERS member contributions under Internal Revenue Code (IRC) 414(h)(2) provisions for member payments of service credit purchases on a pre-tax payroll deduction plan. Alternative Action(s): Do not pass resolution and continue to process all service credit purchases on a taxable basis. Analysis: Currently, CalPERS allows member employers to offer eligible employees the option of buying back service credits from previous CalPERS approved employment (i.e., Redeposit, Service Prior to Membership, Military, etc.). This buy back option is processed on a taxable basis. However, CalPERS, in its Circular Letter No. 800-455, dated June 7, 1996, is now offering member employers the option to allow service credit payroll deduction buy backs on a "pre-tax' basis. � - 1 1 RCA96036.DOC 07/30/96 12:21 PM kcQUEST FOR COUNCIL ACTON MEETING DATE: AUGUST 19, 1996 DEPARTMENT ID NUMBER: AS 96-036 In order to offer this benefit to employees, CalPERS requires member employers to pass the attached resolution. This "pre-tax" offer applies only to those employees who opt to participate through a payroll deduction basis. Service credits purchased through a lump sum basis will continue to be processed as after-tax contributions. Our payroll records show there are approximately 40 employees who could qualify. There would be no direct cost to the City in offering this benefit. Environmental Status: Not Applicable Attachment(s): City Clerk's Page . - 1. Resolution No. -lo fi CALPERS PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES 2. CaIPERS Circular Letter No. 800-455, dated June 7,1996 RCA96036.DOC -2- 07/30/96 12:21 PM M �s � Circular Letter Date: JUNE 7, 1996 California Public Employees' Retirement System Reference No.: P.O.Box 942704 Sacramento, CA 94229-2704 Circular Letter No.: 800-455 (916)3263141 Distribution: I, III, VI, XII Telecommunications Device for the Deaf No Voice(916)326-3240 Special: TO: PUBLIC AGENCIES AND COUNTY SUPERINTENDENT OF SCHOOLS SUBJECT: PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASE(S) This circular letter is to inform employers that as of July 1, 1996, the California Public Employees' Retirement System (CaIPERS) will provide to qualified members the option to elect the pre-tax Davroll deduction plan for their service credit purchases (i.e., Redeposit, Service Prior to Membership, Military, etc.). By filing the attached resolution with CaIPERS, employers are allowed to extend the pick-up of member contributions under Internal Revenue Code (IRC) 414(h)(2) provisions for member payments of service credit purchases. Individual .employers who opt to participate in this "pick-up" program provide their employees, who also opt to participate, with the benefit of deferring income tax liability on member service credit purchases. Please read the program restrictions and requirements listed on the reverse side of this circular. To participate in the pre-tax payroll deduction plan for service credit purchases the employer . must complete the attached resolution and send a copy to: CaIPERS - Member Services Division Service Credit Section - Unit 8.30 P.O. Box 942704 Sacramento, CA 94229-2704 Upon receipt of the employer resolution, CaIPERS will review and advise the employer of the effective date. Members with existing receivables will then be provided an election to convert to the new pre-tax payroll deduction plan option. The employer should not convert existing receivables until authorized by CaIPERS. Any questions regarding this information should be directed to the Service Credit Section at (916) 326-3141 . J Barbara Hegdal, Chief Member Services Division SEE REVERSE 4 GENERAL RESTRICTIONS AND REQUIREMENTS - • The effective date for commencement of the pre-tax payroll deduction plan G cannot be any earlier than July 1, 1996, or the date the employer's completed resolution is received in CaIPERS, whichever is later. The IRS does not allow retroactive deductions; • The pre-tax payroll deduction plan amount and time period are irrevocable and cannot be adjusted at any time during the payroll deduction schedule nor can the deductions revert to after-tax deduction status; o The deductions are considered member contributions-and are subject to income taxes when received by the member as either a retirement benefit or refund; • Cancellation of the pre-tax payroll deduction plan prior to completion-of payments or termination of employment is not allowed by either the member or employer. EMPL O YER RESTRIC TIONS AND REQ UIREMENTS - • The employer must file with CalPERS a completed copy of the attached resolution to allow their employees to participate in the pre-tax payroll deduction plan for service credit purchases. The resolution applies to all employees in the specified coverage group(s); • Pre-tax deductions will be completed through the payroll reporting. process- using. Contribution Code 14 instead of Contribution Code 04; • Pre-tax payroll deductions (Contribution Code 14's) must not be reported by the employer until authorization is received from CalPERS; • The employer is responsible for reducing the taxable income of a member by the pre-tax payroll deduction amount; • Overpayments must be reported as negative adjustments through the payroll reporting process. The employer will be responsible for returning such funds to the member as taxable income. MEMBER RESTRICTIONS AND REQUIREMENTS - • The member has the option to participate in the pre-tax payroll deduction plan; • Payroll deductions for service credit purchases for members who choose not to participate in the pre-tax payroll deduction plan must be reported as after-tax contributions; • To specifically elect the pre-tax payroll deduction plan option, the member must file a binding irrevocable election with CaIPERS; • Direct cash payments (i.e., lump sum and partial payments) are not allowed while the member is participating in the pre-tax payroll deduction plan; • Members with existing receivables (Code 04's) will be given the opportunity to elect the pre-tax payroll deduction plan (Code 14's). This election will be applied on a prospective basis only. Return to CaIPERS- Unit 830 Employer Code: 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 {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 {Employer} elects to participate in the pre-tax payroll deduction plan for all employees in the following CaIPERS coverage group(s): {Membership Coverage Group(s)} NOW, THEREFORE, BE IT RESOLVED: I. That the {Employer}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. ll. That the contributions made by the {Employer} to CaIPERS, although designated as employee contributions, are being paid by the {Employer} 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 {Employer} to CaIPERS. IV. That the {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 July 1, 1996, or the date the completed resolution is received and approved in CalPERS, whichever is later. VI. That the governing body of the {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: BY (Name of Official) BY (Title of Official) (Date adopted and approved) RETURN ADDRESS: FOR CALPERS USE ONLY Pre-tax Payroll Deduction Plan Effective Date: Approved By: Title: MEMBER SERVICES DIVISION, Service Credit Section - Unit 830 RESOLUTION NO.9 6-6 8 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING EMPLOYER PICKUP 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 415(h)(2); and The City of Huntington Beach 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 The City of Huntington Beach elects to participate in the pre-tax payroll deduction plan for all employees in the following CaIPERS coverage groups: Huntington Beach Miscellaneous Employees Huntington Beach Safety Employees NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: 1. That the City of Huntington Beach 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. 2. That the contributions made by the City of Huntington Beach to CaIPERS, although designated as employee contributions, are being paid by the City of Huntington Beach in lieu of contributions by the employees who are members of CaIPERS. 3. 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 Huntington Beach to CaIPERS. 4. That the City of Huntington Beach 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. 1 3/k/calpers/8/2/96 5. That 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 CalPERS, whichever is later. 6. That the governing body of the City of Huntington Beach 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 City Council of the City of Huntington Beach at a regular meeting thereof held on the 19 t h day of A ug„G t 11996. Mayor ATTE�� GG APPROVED AS TO FORM: City Clerk City Attorney REVIEWED AND APPROVED: o w 8� �G I D ED: City Administrator Deputy City Administrator/Directo f Administrative Services 2 3/k/calpers%8/2/96 t Res. No. 96-68 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 19th of August, 1996 by the following vote: AYES: Councilmembers: Harman, Leipzig, Bauer, Sullivan, Dettloff, Green, Garofalo NOES: Councilmembers: None ABSENT: Councilmembers: None The foregoing instrument is a correct gopy cif the original on file in this officeA ; ,;lficio Clerk of the City C,:. tl�e City�orrl . 1hun igton B ch, ,C City Clerk and ex-officio Clerk of the B Deputy City Council of the City of Huntington Beach, California G/resoluti/resbkpg j,