Employer-Paid Employee Retirement Contributions. The purpose of this Article is to implement the provisions contained in Section 414(h)(2) of the Internal Revenue Code concerning the tax treatment of employee retirement contributions paid by the State of California on behalf of employees in the bargaining unit. Pursuant to Section 414(h)(2) contributions to a pension plan, although designated under the plan as employee contributions, when paid by the employer in lieu of contributions by the employee, under circumstances in which the employee does not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer, may be excluded from the gross income of the employee until these amounts are distributed or made available to the employee. Implementation of Section 414(h)(2) is accomplished through a reduction in wages pursuant to the provisions of this Article.
Employer-Paid Employee Retirement Contributions. The State and the Union agree to continue the January 28, 1985, agreement regarding the Internal Revenue Service ruling permitting CalPERS contributions to be excluded from taxable salary for the duration of this Contract.
Employer-Paid Employee Retirement Contributions. The purpose of this Section is to implement the provisions contained in Section 414 (h)
Employer-Paid Employee Retirement Contributions. The State and the Union agree to continue the January 28, 1985 agreement regarding the Internal Revenue Service ruling permitting CalPERS contributions to be excluded from taxable salary for the duration of this contract. This includes an agreement that may be reached for the employer to pay employee retirement contributions. In accordance with that Executive Order and with the Internal Revenue Service guidance under Revenue Ruling 2006-43, this formalizes the implementation of section 414(h)(2) with regard to employee contributions to CalPERS that are made by the employer on behalf of its employees. For this purpose, “employee contributions” means those contributions that are deducted from employees’ salary and credited to individual employees’ accounts under CalPERS. This Section specifically covers employee contributions made on behalf of employees covered by the collective bargaining agreement to which the Section relates.
a. Pick-up of Employee Contributions In accordance with section 414(h)(2) of the Internal Revenue Code (IRC), the employer may “pick up” the employee contributions under the following terms and conditions: The contributions made by the employer to CalPERS, although designated as employee contributions, are being paid by the employer in lieu of contributions by the employees who are members of CalPERS. Employees do not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer to CalPERS. The employer is paying to CalPERS the contribution designated as employee contributions from the same source of funds as used in paying salary; and The amount of the contributions designated as employee contributions and paid by the employer to CalPERS on behalf of an employee is the entire contribution required of the employee under CalPERS.
b. Tax Characterization of Picked-Up Employee Contributions All employee contributions picked up by the employer in accordance with Section 414(h)(2) of the Internal Revenue Code are, for tax purposes, treated as employer contributions and therefore, are not includable in employees’ taxable income until distributed from CalPERS. This Section formalizes the employer’s continuing characterization of employee contributions as employer contributions under section 414(h)(2). Accordingly, employee contributions covered by this Article will continue to be excluded from employees’ taxable income under IRC section 414(h)(2).
Employer-Paid Employee Retirement Contributions. The purpose of this section is to implement the provisions contained in section 414(h)(2) of the Internal Revenue Code and IRS Ruling 2006-43 concerning the tax treatment of employee retirement contributions paid by the State of California on behalf of employees in the bargaining unit. In accordance with that Executive Order and with Internal Revenue Service guidance under Revenue Ruling 2006-43, this formalizes the implementation of section 414(h)(2) with regard to Employee Contributions to CalPERS that are made by the Employer on behalf of its employees. For this purpose, “Employee Contributions” means those contributions that are deducted from employees’ salary and credited to individual employees’ accounts under CalPERS. This Article specifically covers Employee Contributions made on behalf of employees covered by the collective bargaining agreement to which the Article relates.
