20010925 r-01-29RESOLUTION R-01-29
AUTHORIZATION TO PICK UP THE EMPLOYEE'S CONTRIBUTION
TO VRS FOR PAST SERVICE CREDIT
UNDER SECTION 414(h) OF THE INTERNAL REVENUE CODE
WHEREAS, the City of Fairfax desires to provide its employees with tax deferral
pursuant to section 414(h) of the Internal Revenue Code with respect to their
member contributions to the Virginia Retirement System, the State Police
Officers Retirement System and the Judicial Retirement System (collectively
referred to as VRS) for the permissible purchase of past service credit by picking
up member contributions to the VRS; and
WHEREAS, the pick up is authorized under Virginia Code Sections 51.1-142.I
and 51.1-143.C.;
WHEREAS, the VRS keeps track of such picked up member contributions, and is
prepared to treat such contributions as employee contributions for all purposes of
VRS;
NOW, THEREFORE, IT IS HEREBY RESOLVED that effective the first pay
day on or after the later of September 25, 2001 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 contributions of its employees to VRS based on the terms of the salary
reduction election, and such contributions shall be treated as employer
contributions in determining tax treatment under the Internal Revenue Code of the
United States; and it is further
RESOLVED, the binding salary reduction election to be executed by the member
shall include the following: (1) the beginning and ending date of the election, (2)
the amount 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 will not
purchase the service credit through a lump sum payment during the period in
which the salary reduction election is in effect, and it is further
RESOLVED, the member may revoke the salary reduction election only in the
event of an unforeseeable emergency as that phrase is used and defined in IRC
Section 457 and Treasury Regulation Section 1.457-2(h)(4) and if such a
revocation is made, the member may not make a new salary reduction election
during his period of employment, and it is further
RESOLVED that such contributions, although designated 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 wages to affected employees; and it is
further
RESOLVED that member contributions made by the City of Fairfax under the
pick up arrangement shall be treated for all purposes other than income taxation,
including but not limited to VRS benefits, in the same manner and to the same
extent as member contributions made prior to the pick up arrangement; and it is
further
RESOLVED 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 provision, the wages
of each member of VRS who is an employee of the 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 25th day of September, 2001.
Mayor
ATTEST:
City Clerk
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