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BACKGROUND <br />The California Public Employees' Retirement System (CaIPERS) allows employees of <br />participating agencies to purchase service credit, based on certain criteria. For <br />example, employees who served in the military, or worked as temporary employees with <br />a CaIPERS agency, or are redepositing funds may purchase service credit under <br />CaIPERS regulations. The employer does not make any contributions on behalf of the <br />employee; the employees must contribute the necessary amount from their wages <br />through payroll deductions. <br />DISCUSSION <br />Employers may provide their employees, who elect to participate, with the benefit of <br />deferring income tax liability on member service credit purchases by implementing the <br />provisions of Internal Revenue Code (IRC) Section 414(h)(2). Allowing employees to <br />purchase service credit with pre-tax dollars is at no cost to the City and is beneficial to <br />the employees. The employee who wishes to participate must make a binding <br />irrevocable election to fund the purchase with pre-tax dollars. <br />The program is not retroactive and begins only after the resolution has been adopted. <br />The City intends to make this program available to all employees (management, <br />confidential, PCEA, POA and Fire bargaining groups). Approximately 20 employees are <br />currently purchasing service credit from CaIPERS. <br />Submitted by: <br />< < ~ ~~. ~ <br />Julie Yuan-Miu <br />Deputy City Manager/ <br />Admin Services Director <br />Fiscal Review: <br /> <br />David P. Culver <br />Finance Director <br />Approved y: <br />Nelson Fialho <br />City Manager <br />Attachments: <br />1. Resolution <br />Page 2 of 2 <br />