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2011-823 RESOLUTION NO. 2011 — 823 A RESOLUTION IMPLEMENTING CITY OF JANESVILLE "PICK -UP" OF EMPLOYEE RETIREMENT CONTRIBUTIONS PURSUANT TO INTERNAL REVENUE CODE § 414(h)(2) WHEREAS, Internal Revenue Code section 414(h)(2) ( "Code ") permits public employers to "pick- up" contributions to a governmental pension plan that are designated as employee contributions so that they may be paid for on a pre -tax basis and thereby be excluded from an employee's taxable income, provided that the contributions are paid by the employer in lieu of contributions by the employee, and the employee may not elect, directly or indirectly, to receive the amounts instead of having them paid by the employer; and WHEREAS, the Common Council of the City of Janesville ( "City ") have determined that taking this action does not increase the City of Janesville's cost of funding the retirement benefits owed to the Wisconsin Retirement System and chooses to take this action in order to allow covered employees to exclude such amounts from their taxable income due to the application of IRS Code section 414(h)(2); and WHEREAS, it is desirable under federal tax law that the execution or modification of a payroll practice to be implemented by the City affecting employee required contributions to a pension plan be approved and adopted by the Common Council as the governing body of the City; and WHEREAS, the Common Council are authorized to make this determination, pursuant to Wis. Stats. Sec. 62.11(5), and other applicable laws; and WHEREAS, the Council desire that those City employees who are required to contribute a portion of their Wisconsin Retirement System ( "WRS ") contributions by reduction of their wages or salary, either by state law or in accordance with a labor agreement or employment contract, to make such contributions in a pre -tax manner; and WHEREAS, this Resolution applies to contributions to the WRS include both employee required contributions under Wis. Stats. Sec. 40.05(1)(a) and employer required contributions under Wis. Stats. Sec. 40.05(2); and WHEREAS, the Council recognize that contribution to a pension plan originating through reduction of an employee's wages or salary are traditionally made on an after -tax basis unless otherwise accepted by the receiving pension plan; and WHEREAS, the Council further recognize that the Wisconsin Department of Employee Trust Funds, which administers WRS, including, but not limited to Wis. Stats. Secs. 40.05 and 40.05(1)(a)1., as amended from time to time, will accept pre -tax contributions from employees if the employer meets the criteria set forth under federal tax law; and WHEREAS, the Council intend that the actions of the City setting forth the method by which employee contributions to WRS will be made in a pre -tax manner to be in compliance with all applicable rules and laws under the Internal Revenue Code and all supporting rulings, including Internal Revenue Code Section 414(h)(2) and Revenue Ruling 2006 -43, as from time to time amended or renumbered; and WHEREAS, the Council intend that the actions of the City setting forth this method to be applied prospectively, from the effective date of the adoption of this Resolution; and WHEREAS, the Council find that the adoption of the protocol described herein is in the best interest of the employees and City. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF JANESVILLE, that the City's adoption of the procedure to implement the pre -tax contributions to WRS by employees required to make WRS contributions, either by state law or in accordance with a labor agreement or employment contract, is hereby approved; and BE IT FURTHER RESOLVED, that the proper officers and officials of the City are hereby authorized and directed to take any and all actions as they deem necessary or advisable to ensure that all employees required to make WRS contributions will do so in a pre -tax manner by reducing each employee's compensation by the appropriate amount; and BE IT FURTHER RESOLVED, that, pursuant to IRS Code section 414(h)(2), the Common Council, on behalf of the City of Janesville, hereby elects to "pick -up" all contributions designated as employee contributions that its covered employees owe to the Wisconsin Retirement System ( "WRS "), and that all contributions that are designated as employee contributions to the WRS will be paid by the City in accordance with the rules of IRS Code section 414(h)(2). These "pick -up" contributions will be withheld from employee wages as a condition of employment with no individual discretion by employees to have some other amount withheld or to have no amount withheld; and BE IT FURTHER RESOLVED, that the proper officers and officials of the City are hereby authorized and directed to take any and all actions as, from time to time and at any time, any or all of them deem necessary and /or advisable to ensure that all employees required to make WRS contributions will not have the option or election of receiving the amount of the WRS contribution in cash or deferred election right within the meaning of Treasury Regulation section 1.401(k)- 1(a)(3) with respect to any required employer or required employee contribution to the WRS; and BE IT FURTHER RESOLVED, that the proper officers and officials of the City are hereby authorized and directed to take any and all actions, from time to time and at any time, as any or all of them deem necessary an /or advisable to ensure that all employees required to make WRS contributions will not have the option of opting out of the pre -tax contribution program and will not have the option of making their contribution in an after -tax fashion; and BE IT FURTHER RESOLVED, that the proper officers and officials of the City are hereby authorized to perform all such acts, and to execute and deliver all such agreements, undertakings, documents, instruments, and certificates in the name and on behalf of the City or otherwise as each such officer and /or official from time to time and at any time may individually and /or collectively deem necessary, advisable, desirable, and /or appropriate to effectuate the purpose and intent of this Resolution; and BE IF FURTHER RESOLVED, that the Council reserves the right to modify or terminate any action taken herein if the Council deems that such modification or termination is in the best interest of the City or is required to comply with applicable law. ADOPTED: August 8, 2011 Motion by: Steeber Second by: Dongarra -Adams APPROVED: Councilmember Aye Nay Pass Absent Eric J. evitt, Ci , Tnager Brunner X Dongarra -Adams X ATTEST: Li ::aId y..,„ 42 x J e Ann Wul erk - Treasu Rashkin X APPROVED AS TO FORM: Steeber X Cel Voskuil X Wald Klimczyk, City Attorney Proposed by: City Comptroller and City Clerk - Treasurer Prepared by City Attorney ` - J