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