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City Council Report
City of
Santa. Monica
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City Council Meeting: ,
Agenda Item:3T
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Resolution to Ensure Tax Deferral of City-Paid Contributions to California
Public Employees' Retirement System
Recommended Action
Staff recommends that the City Council adopt a resolution ensuring that employees are
provided the tax benefit of deferring the value of City-paid employee contributions to the
California Public Employees' Retirement System.
Executive Summary
The City of Santa Monica contracts with the California Public Employees' Retirement
System (CaIPERS) and reports to CaIPERS additional compensation associated with
the City's payment of the employee contributions. Adoption of the recommended
resolution ensures that tax on the additional compensation paid by the employee will be
deferred until the employee receives the retirement benefit.
Discussion
The City of Sarrta Monica contracts with the California Public Employees' Retirement
System (CaIPERS) to provide retirement benefits for permanent City employees. The
City reports to CaIPERS, as qualified compensation, the monetary value of the required
employee contributions, contributions paid by the City on behalf of each employee. This
additional employee compensation, referred to as Employer Paid Member Contributions
("EPMC"), is excluded from the employee's gross taxable income under the provisions
of Section 414(h)(2) for the Internal Revenue Code.
The City Council adopted various resolutions (1) to provide for EPMC for all permanent
employees as prescribed by CaIPERS and (2) to allow the employee to defer the tax on
the additional compensation reported to CaIPERS until after retirement and receipt of a
retirement benefit. In order to be in compliance with the Internal Revenue Service
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prescribed resolution, staff recommends that the City Council adopt the attached
resolution.
Financial Impacts & Budget Actions
Adoption of the attached resolution has no financial impact on the City and no budget
action is required.
Prepared by: Candace Tysdal, Assistant Director of Finance
Approved:
Forwarded to Council:
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Carol Swinde Rod Gould
Director of Finance City Manager
Attachment:
A. Resolution of the City Council of the City of Santa Monica Regarding Employer
Paid Member Contributions.
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Reference Resolution No.
10557 (CCS).