HomeMy WebLinkAbout04 - PARS Accumulated Leave Conversion ProgramCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 4
August 24, 2004
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Human Resources Department
Diana Axley, Director of Human Resources
644 -3303, daxley @city.newport - beach.ca.us
SUBJECT: PARS Accumulated Leave Conversion Program
RECOMMENDATION:
Adopt the attached Resolution to provide an Accumulated Leave Conversion Program to
eligible employees with PARS (Phase II) effective July 1, 2004.
DISCUSSION:
Backqround:
The Accumulated Leave Conversion Program would allow employees to supplement their
PERS Retirement Plan with a PARS Plan that places a portion or all of their accrued leave at
the time of termination into a qualified IRS and California Government Code Plan. These
monies are picked up by the City as mandatory contributions and paid directly to the Plan. The
contributions satisfy the requirements of 414(h) of the Internal Revenue Code of 1986, as
amended, and are not considered as income until distributed, as designated by the employee,
from the plan. All administrative fees and trustee fees will be paid by the employees with their
distribution monies.
PARS (Phase II) has administered several programs for the City over the past ten years and is
a well established entity in this area doing this type of work for government agencies. The City
has previously conducted its own audit of their operation a few years ago with no findings that
would cause us concern.
This plan provides employees, particularly those with long tenure, a vehicle to supplement their
current PERS Plan. Up to this point, there has been no method to defer the tax repercussions
for leave sell -back or other lump sum payments at the end of employment. This Plan will allow
employees the added benefit of choosing a payment plan for these funds with less tax
penalties.
PARS Accumulated Leave Conversion Program
August 24, 2004
Page 2
This Resolution appoints the Director of Human Resources as the City's Plan Administrator to
execute the PARS legal and administrative service documents on behalf of the City to
implement the PARS supplemental plan to CalPERS.
Environmental Review:
N/A
Funding Availability:
The full cost of the PARS Accumulated Leave Conversion Program is paid for by the
employees with their distribution monies. There is no budget impact for this program.
Submitted by:
Diana Axley
Director of Human Resources
Attachments: A Resolution of the City of Newport Beach to Provide an Accumulated
Leave Conversion Program.
RESOLUTION NO. 2004-
A RESOLUTION OF THE CITY OF NEWPORT BEACH TO PROVIDE AN
ACCUMULATED LEAVE CONVERSION PROGRAM
WHEREAS, it is to be determined to be in the best interest of the City and its
employees to provide an Accumulated Leave Conversion Program to eligible
employees;
WHEREAS, the City is a member of the Public Agency Retirement System
(PARS) Trust, which has made available an Accumulated Leave Conversion
Plan (the "Plan ") supplementing CalPERS and qualifying under the relevant
sections of the Internal Revenue Code and the California Government Code;
WHEREAS, the City wishes to provide for certain mandatory employee
contributions by employees who irrevocably elect to participate in the Plan;
WHEREAS, the City wishes to provide that the mandatory employee
contributions will be picked up by the City and paid directly by the City to the
Plan, as set forth in Section 414(h) of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, BE IT RESOLVED it resolved that:
1. The City Council, being a member of the PARS Trust, hereby adopts
the PARS Accumulated Leave Conversion Plan, as part of the City
Retirement Program, effective July 1, 2004, which Plan allows for
employees to irrevocably elect to participate in the Plan that would
require them to have a portion of their accrued leave at the time of
termination contributed to the Plan as a mandatory employee
contribution ( "Mandatory Contributions "); and
2. The City Council hereby agrees to pick up such Mandatory
Contributions and pay them directly to the Plan. Such contributions
shall satisfy the requirements of 414(h) of the Internal Revenue Code
of 1986, as amended, and therefore are not intended to be includable
in the employee's income until distributed from the Plan; and
3. The City Council hereby appoints the Human Resources Director, or
his /her successor or his /her designee as the City's Plan Administrator
for the Public Agency Retirement System; and
4. The City's PARS Administrator is hereby authorized to execute the
PARS legal and administrative service documents on behalf of the City
to implement a PARS supplemental plan to CalPERS. In addition, if
the City's PARS Administrator finds that the PARS supplemental plan
benefit must be limited under Section 415 of Internal Revenue Code,
then the Plan Administrator will implement replacement benefit
programs at no additional cost to the City.
ADOPTED this 20 day of August, 2004.
Mayor
ATTEST:
City Clerk