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Home My WebLink AboutR25-Economic Development Agency CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: CalPERS Pre-Tax Payroll Deduction plan for employee service credit purchases DATE: July21,2011 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- SvnoDsis of Previous Commission/Council/Committee Action(s): On July 21, 20ll, Redevelopment Committee Members Marquez and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Communitv Development Commission) Resolution of the Community Development Commission of the City of San Bernardino implementing provisions of the Internal Revenue Code Section 414(h)(2) for miscellaneous employees and authorizing a pre-tax payroll deduction plan for service credit purchases MOTION: Tbat the Community Development Commission of the City of San Bernardino adopt the attached Resolution subject to the clarification and understanding that all such contributions specified therein shall be made solely by the employee and not by the Agency, which is not, under any circumstances, to provide the benefits conferred upon Agency employees pursuant to said Resolution for the use by the employee of "before tax dollars" for such employee funded contributions _____________________________________________________________________________________________________________________________________________________________________________________________u____________ Contact Person(s): T eri Baker Phone: (909) 663-1044 Project Area(s): NA Ward(s): NA Supporting Data Attached: [;'] Staff Report [;'] Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A Fiscal Review: Lori Panz' 'efFinancialOfficer Signature: c:;: ~-~ Emil A. Marzullo, Interim Executive Director Budget Authority: __________________________________u_____________u_______________u_____________________________________________________________u___________________________________________________________u____________u___. Commission/Council Notes: --------------------------------------------------------_.----------~----------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev CommissionlCDC 2011\08-01-11 CalPERS Pre-tax service credit program.docx COMMISSION MEETING AGENDA Meeting Date: 08/01/2011 Agenda Item Number: ~ ~l~~ l>a..~ t..5 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ CALPERS PRE-TAX PAYROLL DEDUCTION PLAN FOR EMPLOYEE SERVICE CREDIT PURCHASES BACKGROUND: In 1996, the Board of Administration of the California Public Employees' Retirement System ("CaIPERS"), approved a pre-tax payroll deduction plan for employee service credit purchases under Internal Revenue Code ("IRC") Section 414(h)(2). This benefit allows employees who separated from a CalPERS Agency (or an agency with a reciprocal agreement with CaIPERS) and cashed out their retirement benefits at the time of separation to buy back that previous time at their expense on a tax- deferred basis. The Redevelopment Agency of the City of San Bernardino ("Agency") has the authority to implement the program but it is not required by law. CURRENT ISSUE: CalPERS recently contacted the Agency to inform staff that their records indicate that the Agency never implemented this program. CalPERS will be going through some changes in September of this year and this program will no longer be available after that time. In order to implement the program and make it available to Agency employees who wish to participate, an Employer Pickup Resolution ("Resolution") authorizing the program must be approved by the Community Development Commission of the City of San Bernardino ("Commission"). The City adopted Resolution 2000-264, as attached to this staff report, authorizing this program in September of 2000 (amended by Resolution 2005-280 in August of 2005). Although few employees have taken advantage of the program, it is a nice benefit for those who are in a position to buy back service credit time. There is no cost to the Agency or the employee. If the Commission approves the Resolution implementing the program, the program will become effective upon receipt and approval by CaIPERS. Also attached is the CalPERS standard form Resolution that has been used for both the above mentioned City Resolution and the attached Commission Resolution. ENVIRONMENTAL IMP ACT: No impact under the California Environmental Quality Act ("CEQA"), pursuant to Section 15301. FISCAL IMPACT: None. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev CommisSlonlCDC 2011\08-01-11 CalPERS Pre-tax service credit programdocx COMMISSION MEETING AGENDA Meeting Date: 08/01/2011 Agenda Item Number: /2.2-r Economic Development Agency Staff Report CalPERS Pre-Tax Payroll Deduction plan Page 2 RECOMMENDATION: That the Community Development Commission of the City of San Bernardino adopt the attached Resolution subject to the clarification and understanding that all such contributions specified therein shall be made solely by the employee and not by the Agency, which is not, under any circumstances, to provide the benefits conferred upon Agency employees pursuant to said Resolution for the use by the employee of "before tax dollars" for such employee funded contributions. ~ Emil A. Manu erim Executive Director -------~------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ P:\Agendas\Comm Dev Commission\CDC 2011\08-01-11 CalPERS Pre-lax service credit program.doclI; COMMISSION MEETING AGENDA Meeting Date: 08/01/2011 Agenda Item Nnmber: I22-r ,4 tla L>11 me-fLtj ~ I <, --J-D Sfa-J-I ~<-r7--I- " 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 2S 26 27 28 Resolution No 2000-264 RESOLUTION OF THE CITY OF SAN BERNARDINO IMPLEMENTING PROVISIONS OF INTERNAL REVENUE CODE (IRC) SECTION 414(H)(2) FOR MISCELLANEOUS EMPLOYEES AND AUTHORIZING A PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES. WHEREAS, on January 24, 2000, the Mayor and Common Council adopted I Resolution 2000-13, a resolution establishing a Management and Confidential I Employee compensation and benefits plan; WHEREAS, the Board of Administration of the Califomia Public Employees' Retirement System (CaIPERS) at the April 1996 meeting approved a pre-tax payroll deduction plan for service credit purchases under Intemal Revenue Code (IRC) Section 414(h)(2); and, WHEREAS, the City of San Bemardlno has the authority to implement the ,/ 15 I' 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 Miscellaneous employees who are members of CaIPERS; and, WHEREAS, THE City of San Bemardino elects to participate in the pre-tax payroll deduction plan for all employees in the Management and Confidential Unit of the Miscellaneous Group. BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: I. That the City of San Bemardino will implement the provisions of IRC Section 414(h)(2) by making employee contributions for service credit purchases pursuant to the Califomla State Govemment Code on behalf of Its employees who are members of CalPERS and who have made a binding irrevocable election to participate .' 1 2 3 4 5 6 7 8 9 10 11 12 13 14 il 15 I 16 17 18 19 20 21 22 23 24 2S 26 27 28 2000-264 RESOLUTION OF THE CITY OF SAN BERNARDINO . . . AUTHORIZING A PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES. in the pre-tax payroll deduction plan. "Employee contributions. shall mean those contributions reported to CalPERS 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 San Bernardino to CalPERS, although designated as employee contributions, are being paid by the City of San Bemardino 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 San Bernardino to CaIPERS. IV. That the City of San Bemardino 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 CaIPERS. whichever is later. VI. That the governing body of the City of San Bemardino 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. , 2000-264 1 2 RESOLUTION OF THE CITY OF SAN BERNARDINO . . . AUTHORIZING A PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES. 3 4 S 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Common Council of the City of San Bernardino at a Joint Regular meeting thereof, day of September , 2000, by the following vote, held on the 5 th to wit: COUNCILMEMBERS: ESTRADA LIEN 10 I MC GINNIS SCHNETZ SUAREZ ANDERSON MC CAMMACK 15 II AYES NAVES ABSTAIN ABSENT x 8 9 x x 11 x x x 12 13 14 x 16 17 18 The foregoing resolution ~ej1.Pi ~ fj>d~~~I.~ is. hereby approved this 81"- 19 20 21 22 September ,2000. 23 Approved as to form and Legal content ~ 24 JAMES F. PENMAN, City Attorney 2S 26 27 28 HRlAgenda ltems:RESO.PERS.BUY.BACK 08130/2000 dp 1l-:-11 d1 ~, /j' * -5 fc; H rCj7u:1- Return to CaIPERS . Unit 830 Employer code: 1319 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 San Bernardino Economic Development Agency 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 San Bernardino Economic Development Agency elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS Coverage Group(s): All Miscellaneous NOW, THEREFORE, BE IT RESOLVED: I. That the San Bernardino Economic Development Agency 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 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 San Bernardino Economic Development Agency to CaIPERS, although designated as employee contributions, are being paid by the San Bernardino Economic Development Agency 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 San Bernardino Economic Development Agency to CaIPERS. IV. That the San Bernardino Economic Development Agency 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 San Bernardino Economic Development Agency 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 San Bernardino Economic Development Agency this 7th day of July, 2011. BY (Signature of Official) (Title of Official) RETURN ADDRESS: San Bernardino Economic Development Agency 201 N. "E" Street, Suite 301 San Bernardino, CA 92401 Alln: Arthur Medina I Financial Analyst ************************************************************************************************************************ FOR CALPERS USE ONLY Pre-tax payroll deduction plan effective date: Approved By: Title: MEMBER SERVICES DIVISION, Service credit section-Unit 830 1 2 3 4 RESOLUTION NO. RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO IMPLEMENTING PROVISIONS OF THE INTERNAL REVENUE CODE SECTION 414(H)(2) FOR MISCELLANEOUS EMPLOYEES AND AUTHORIZING A PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES 5 6 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") is a public body, corporate and politic; and WHEREAS, the Board of Administration of the California Public Employees' Retirement System ("CaIPERS") at the 1996 meeting approved a pre-tax payroll deduction plan for service credits purchases under Internal Revenue Code ("IRC") Section 414(h)(2); and WHEREAS, the Community Development Commission of the City of San Bernardino ("Commission") 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 member of CaIPERS; and WHEREAS, the Commission elects to participate in the pre-tax payroll deduction plan for all employees in the Miscellaneous CalPERS Coverage Group. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS FOLLOWS: Section 1. The Commission hereby approves the implementation of 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 and are credited to individual employee accounts for services credit purchases, thereby resulting in tax deferral of employee contributions. 1 P:\Agendas\Rewlutions\Resolutions\2011\OS-OI-11 PERS Service Credit buy back progrant_docx 1 Section 2. The contributions made by the City of San Bernardino Economic 2 Development Agency to CalPERS, although designated as employee contributions, are being paid 3 by the City of San Bernardino Economic Development Agency in lieu of contributions by the 4 employees who are members ofCaIPERS. 5 Section 3. The employees shall not have the option of choosing to receive the 6 contributed amounts directly instead of having them paid by the City of San Bernardino Economic 7 Development Agency to CaIPERS. 8 Section 4. The City of San Bernardino Economic Development Agency shall pay to 9 CalPERS the contributions designated as employee contributions from the same source of funds as 10 used in paying salary, thereby resulting in tax deferral of employee contributions. 11 Section 5. The effective date for commencement of the pre-tax deduction plan cannot be 12 any earlier than the date the completed Resolution is received and approved by CaIPERS. 13 Section 6. The governing body of the City of San Bernardino Economic Development 14 Agency shall participate in and adhere to requirements and restrictions of the pre-tax payroll 15 deductions when authorized by CalPERS for those employees of the above stated Coverage Group 16 who have elected to participate in the plan. 17 Section 7. This Resolution shall take effect from and after its date of adoption by this 18 Commission. 19 /1/ 20 //1 21 //1 22 //1 23 /1/ 24 /1/ 25 /1/ 26 /1/ 27 /1/ 28 2 P:\Agendas\Resolutions\Resolutions\2011\08-01-1] PERS Service Credit buy back program.docx 1 2 3 4 5 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO IMPLEMENTING PROVISIONS OF THE INTERNAL REVENUE CODE SECTION 414(H)(2) FOR MISCELLANEOUS EMPLOYEES AND AUTHORIZING A PRE-TAX A PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Development Commission ofthe City of San Bernardino at a meeting 6 thereof, held on the 7 8 Commission Members: 9 MARQUEZ 10 JENKINS 11 BRINKER 12 SHORETT 13 KELLEY 14 JOHNSON 15 MC CAMMACK day of , 20 II by the following vote, to wit: Aves Navs Abstain Absent 16 17 18 Secretary 19 The foregoing Resolution is hereby approved this day of , 2011. 20 21 22 23 24 Patrick J. Morris, Chairperson Community Development Commission of the City of San Bernardino Approved as to Form: 25 26 By: G.~d~ 27 Agency COuRsel 28 3 p:\Agcndas\Resolulions\Resolutions\2011\OS-OI-11 PERS Service Credit buy back program.docx