ITEM:

ADMINISTRATIVE COMMITTEE

 

1.

CONSIDER ADOPTION OF RESOLUTION NO. 2005-09 ELECTING TO PARTICIPATE IN THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM PRE-TAX DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES

 

Meeting Date:

October 6, 2005

Budgeted:  N/A

 

 

 

From:

David A. Berger,

Program/

 

 

General Manager

Line Item No.:

 

 

 

Prepared By:

Cynthia Schmidlin

Cost Estimate:

None

 

General Counsel Approval:  Yes

Committee Recommendation:  The Administrative Committee reviewed this item on October 6, 2005 and recommended _______________________.

CEQA Compliance:  N/A

 

SUMMARY:  By filing a Resolution with the California Public Employees’ Retirement System (CalPERS), employers are allowed to extend the pick-up of member contributions, under Internal Revenue Code section 414(h)(2), to service credit purchases.  This provision of the tax code allows retirement contributions, made directly from payroll, to be pre-tax.  Individual employers who opt to participate in this “pick-up” program provide their employees, who elect to participate, with the benefit of deferring income tax liability on member service credit purchases.  The effective date for the commencement of this pre-tax plan can not be any earlier than the date the completed resolution is received and approved in CalPERS.

 

RECOMMENDATION: That the Board elect to participate in the CalPERS pre-tax payroll deduction plan for service credit purchases, by adoption of the attached Resolution (Exhibit 1-A). This item was considered by the Administrative Committee on October 6, 2005, at which time the committee recommended ___________________.

 

IMPACTS TO STAFF/RESOURCES: Adopting the attached resolution will have no impact on staff resources.  Service credit purchases will be paid to CalPERS by District check. However, deductions from the paychecks of participating employees will cover those payments.

 

BACKGROUND:  The District has previously adopted a resolution allowing employees to take advantage of IRS provisions regarding pre-tax contributions to the California Public Employees Retirement’ System.  This resolution involved the District “pick-up” of member contributions towards retirement premiums.  Resolution 2005-09 would extend the benefit of pre-tax status to employee payroll deductions for the purchase of retirement service credit. 

 

EXHIBITS

1-A      Resolution No. 2005-09

 

 

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