95-244 Resolution No. 95-244
RESOLUTION
PROVIDING FOR THE PROCEDURES TO FUND THE CITY OF ELGIN
POLICE PENSION FUND FROM PARTICIPANTS ' CONTRIBUTIONS
WHEREAS, the City of Elgin has adopted Article 3 of the
Illinois Pension Code pertaining to the creation of a police
pension fund in conformance with 40 ILCS §5/3-103 ( 1992) ; and
WHEREAS, the City Council of the City of Elgin has
previously established and created the Elgin Police Pension
Fund in accordance with 40 ILCS §5/3-101 et seq. ( 1992) ; and
WHEREAS, Elgin' s police officers are required to
contribute a percentage of their respective salaries to the
Police Pension Fund pursuant to 40 ILCS §5/3-125 . 1 ( 1992) ; and
WHEREAS, the City of Elgin desires to "pick up" the
police officers ' contributions to the Police Pension Fund in
accordance with 40 ILCS §5/3-125 .2 ( 1992) by reducing the
current cash salaries of such police officers; and
WHEREAS, the City of Elgin desired to cease withholding
Federal and State income taxes on "picked up" contributions,
as provided by 40 ILCS §5/3-125 .2 ( 1992) , as soon as the
Internal Revenue Service or the Federal courts rule pursuant
to United States Internal Revenue Code Section 414 (h) that
such contributions shall not be included as gross income of
police officers until such time as they are distributed or
made available to the individual police officers, or their
heirs, by the Elgin Police Pension Fund.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS:
That upon receiving a favorable ruling by the Internal
Revenue Service or a Federal Court of competent jurisdiction
stating that such contributions shall not be included as gross
income of police officers until such time as they are
distributed or made available:
Section 1 . The City of Elgin shall "pick up" police
officers ' contributions to the Police Pension Fund in
accordance with the provisions of 40 ILCS §5/3-125 .2 ( 1992 ) ;
Section 2 . Police officers ' current cash salaries shall
be reduced by an amount equal to the amount "picked up" by the
City of Elgin;
Section 3 . The City of Elgin shall cease to withhold
Federal and State income taxes on the "picked up"
contributions; and
Section 4 . Police officers shall not be given the option
to receive cash directly in lieu of contributions .
Section 5 . That this ordinance shall be in full force
and effect immediately after its passage in the manner
provided by law.
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: November 8, 1995
Adopted: November 8, 1995
Omnibus Vote: Yeas 6 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
, ar
Elm
r Agenda Item No.
L...
,-... .7..,
ii,„
October 18, 1995
TO: Mayor and Members of the City Council
FROM: Richard B. Helwig, City Manager
SUBJECT: Pension "Pick-Up" Resolution for Police Officers
PURPOSE
The purpose of this memorandum is to present a resolution to
the Mayor and members of the City Council to allow police
officers to file for a private letter ruling from the Inter-
nal Revenue Service. This resolution would allow the pension
contribution of officers to be made with pre-tax income.
BACKGROUND
Police officers are the only employee group whose contribu-
tion to their pension plan is made with after tax income. In
the recent negotiation, both parties agreed to take the neces-
sary steps to qualify police officers to use pre-tax income
for contribution to their pension plan.
The police union agreed to have their attorney file the neces-
sary papers with the Internal Revenue Service and the City
agreed to effect the necessary change in contribution format
if the Union succeeded in obtaining IRS approval .
The attached resolution is required to be adopted by the City
Council and submitted with the request for a private letter
ruling to the Internal Revenue Service.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None.
FINANCIAL IMPACT
There is no cost to the City in effecting this change in
elk contribution format for the police officers.
LEGAL IMPACT
None.
A
Pension "Pick-up" Resolution
October 18, 1995
Page 2
RECOMMENDATION
It is recommended that council adopt the attached resolution
allowing police officer pension contributions not be included
as gross income for current income tax purposes .
Respectfully submitted,
Human Res urces Director
Richard B. Helwig
City Manager
OF/vls
r
•
r