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CITY OF COLTON <br />AGENDA REPORT <br />FOR COUNCIL MEETING OF January 17, 2006 <br />TO: HONORABLE MAYOR AND CITY COUNCIL <br />p <br />'" <br />FROM: BLANCA ARAMBULA, ADMINISTRATIVE ANALYST II <br />APPROVAL: ANTHONY ARROYO, HUMAN RESOURCES DIRECTOR <br />1'"' <br />SUBJECT: APPROVE RESOLUTION TO ALLOW EMPLOYEES TO <br />PARTICIPATE IN A PRE-TAX PAYROLL DEDUUCTION PLAN <br />OPTION FOR SERVICE CREDIT PURCHASE(S) <br />DATE: December 28, 2005 <br />BACKGROUND: <br />The Human Resources Department presented this item to the City Council in September and it <br />was approved. However, CaIPERS has since then informed the City that the wording on the <br />resolution is not sufficient. Staff has included all the required language as directed by CaIPERS <br />and are resubmitting the resolution for approval. <br />CaIPERS offers a variety of service credit purchase options and employees are taking advantage <br />of the options to help boost their retirement benefits. While purchasing additional service credit will <br />boost employee retirement benefits in the long term, in the short term it requires the employee to <br />pay for this additional service. The cost to the employee varies and is determined using formulas <br />that are established by law and may differ based on the type of service employees will be <br />purchasing. These costs can be costly to the employee. Currently, the money employees are <br />paying to purchase service credit is taxable income. <br />DISC USSION/ANALYSIS: <br />By filing a Resolution with CaIPERS, employers are allowed to extend the pick-up of member <br />contributions under Internal Revenue Code section 414(h)(2) provisions for member payments by <br />payroll deductions for service credit purchases. Individual employers who opt to participate in this <br />"pick-up" program provide their employees, who elect to participate, with the benefit of deferring <br />income tax liability on member service credit purchases. <br />FINANCIAL IMPACT: <br />None, employees pay the cost of the service credit cost. <br />ENVIRONMENTAL IMPACT: <br />None. <br />CONFLICT OF INTEREST — Gift Disclosure Requirements <br />None. <br />RECOMMENDATION: <br />Staff respectfully recommends approval of the resolution allowing employees to participate in a <br />pre-tax payroll deduction plan option for service credit purchase(s). <br />Attachment: Resolution <br />IREVIEW TEA <br />City Attorney:Finance Director: �. <br />C!tyManager:iwOTHER: <br />