R-08-38
RESOLUTION NO. R-08-38
~Cfirma'tion of Au'thorizat:ion t:o Pick. up t:he Employees Con't:ribu'tion 'to VRS Cor Ci'ty DC
FairCax - 55316
Cor Past: Service Credit: under ~ 414(h) oC t:he
In'ternal Revenue Code
"VVIIE:R.EAS, the City of Fairfax provides its employees vvith tax deferral pursuant: to
~ 414(h) Int:emal Revenue Code vvith respect to their member contributions to the Virginia
Retirement System, (referred to as VRS) for the permissible purchase of past service credit by
picking up member con.tributions to the VRS; and
"V\THEREAS, the pick up is authorized under Virginia Code Sections 51.1-142.2; as
su.ch Code has been or may be amended from time to time;
"VVHEREAS, the VRS keeps track of such picked up member contributions", and treats
such contributions as employee contributions for all purposes of VRS;
"""'HEREAS, the I.ntemal Revenue Service in Notice 2006-43 has provided transition
relief for existing pick u.p arrangements provided that an authorized person takes formal
action to evidence the establishment of "'the pick-up arrangement no later than January 1". 2009.
"""\I\THEREAS, in order to avail itself of the protection given under Notice 2006-43". the
City of Fairfax: desires to affirm its intention to establish and maintain a pick-up arrangement
through formal action by its goveming body_
NOVV. THEREFORE. IT IS HEREBY RESOLVED that the existing pick-up
arrangement for past service credit is hereby affirmed as it relates to salary reduction elections
in effect prior "'to the date of this Resolution". and it is further
R...ESOL VED that effective the first pay day on or after the later of Todav's Da-te
or the date the member executes a binding and irrevocable salary reduction election relating to
the past service permitted to be purchased, the City of Fairfax shall pick up all or a portion of
the member contributians of its employees to VRS based on the terms of the salary reduction
election, and su.ch contributions shall be treated as employer contributions in determining tax
treatment under the Intemal Revenue Code of the United States; and it is further
RESOL VED, the binding salary reduction election to be executed by the member
shall include the follo"""ing: (1) the beginning and ending date afthe election.,. (2) the arn.ount
of the salary reduction on a pay period by pay period basis. (3) the total amount of
contribution expected to be involved, (4) a statement: that the member may not: receive the
contributed amounts instead of having them paid by the City of Fairfax to the VRS. and (5)
an agreement that the member "VV'ill not purchase the service credit thraugh. a lu.mp sum
payn:1ent during the periad in """hich the salary reductian electian is in effect, and it is further
RESOL VED, the member may revoke the salary reduction election only in the event
af an unfareseeable emergency as that phrase is used and defined in ~C Section 457 and
Treasury Regulatian Section 1.457-2(h) (4) and if such a revacation is made". "'the member may
not make a neVV" salary reduction election during his period of employment". and it is further
RESOLVED that such cantribu"'tians, although desig:nated as member contributions,
are to be made by the City of Fairfax in lieu of member contributions; and it is further
RESOLVED that pick up member contributions shall be paid from the same source of
funds as used in paying the ",,"ages to affected employees; and it is further
R...ESOL VED that member contributions made by the City af Fairfax -under the pick
up arrangement shall be treated far all purpases ather than incame taxatian". in.cluding but nat
limited to VRS benefits, in the sarn.e marmer and to the same extent as member contributions
made priar tOo the pick up arrangement; and it is further
RESOL VED that nothing herein shall be construed so as to permit or extend an
option to VRS members to receive the pick up contributions made by the City of Fairfax
directly instead of having them paid to VRS; and it is further
RESOLVED that notwithstanding any contractual or other provisions, the wages of
each member ofVRS who is an employee ofthe City of Fairfax shall be reduced by the
amount of member contributions picked up by the City of Fairfax on behalf of such employee
pursuant to the foregoing resolutions.
Adopted this 9 day of September 2008. ~ ~
ayor \
ATTEST:
~~
City Clerk
The vote on the motion to approve was recorded as follows:
VOTE:
Councilwoman Cross Aye
Councilman Drummond Aye
Councilman Greenfield Aye
Councilman Meyer Aye
Councilman Rasmussen Aye
Councilman Stombres Aye