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DEPARTMENT OF STATE TREASURER <br /> <br /> June 18, 1982 <br /> <br />MEMORANDUM <br /> <br />TO: Participating Employers in the Local <br /> Governmental Employees' Retirement System <br /> <br />FROM: E.T. Barnes <br /> <br />SUBJECT: Tax Sheltering of Member Contributions to the <br /> Retirement System Effective July 1, 1982 <br /> <br /> The 1981 General Assembly (1982 Regular Sessi6n) has enacted legislation which <br />allows participating employers in tile North Carolina Local Governmental Employees' ~ <br />Retirement System to elect a method of income tax sheltering tile retirement <br />contributions of employees who are members of this System. A copy of this provision, <br />which creates G.S. 128-30(bl), is herewith attached. <br /> <br /> The method enacted is the employer pick up Of member contributions arrangement <br />allowed under Section 414(h)(2) of the Internal Revenue Code. This pick up is <br />funded by the same 6% retirement contribution deducted from a member's gross salary. <br />Using this arrangement, there is no additional cost to an employer for the pick up <br />and will result in an increase in the take-home pay of a typical employee of about <br />2% to 4%. <br /> <br /> Before tax sheltering of member contributions under this new law can become <br />applicable to employees of a paKticipating employer, the governing body of the local <br />government must elect tile arrangement. The electioo can be effective only on and <br />after July 1, 1982 and only as of the first day of the calendar month in which the <br />governing body makes the election (prior to any payrolls paid that month) or the <br />first day of the month following such election. A model resolution for a governing <br />body to adopt is herewith attached. <br /> <br /> If a participating employer elects to tax shelter employees' contributions to <br />the Local Governmental Employees' Retirement System, tile following steps need to <br />be taken: <br /> <br /> (1) The governing body must make the election by adopting an authorizing <br /> resolution in the form of the model resolution. <br /> (2) A certified copy of this resolution must be filed with the Retirement <br /> and Health Benefits Division of the Department of State Treasurer. <br /> <br /> '(3) The employer's payroll office must: <br /> (aldeduct from the gross salary of an employee the required <br /> 6% retirement contribution; <br /> <br /> (OVER) <br /> <br /> <br />