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CARC?L.INA <br /> . - STATE OF NORTH <br /> C)EPARTMENT OF STATE TREASURER <br /> :;;_• _..- <br /> RETIREMENT AND HEALTH BENEFITS DIVISION <br /> ii <br /> �. T. eARNEs <br /> ARL.AN 6 BOYLE5 I�RPLITY TREASURED <br /> ,•{; TRCACURER <br /> June 18, 1982 <br /> MEMORANDUM <br /> T0: Participating Employers in the Local <br /> Governmental Employees' Retirement System <br /> FROM: E. T. Barnes <br /> SUBJECT: Tax Sheltering of Member Contributions to the <br /> Retirement System Effective July 1, 1982 <br /> The 1981 General Assembly (1982 Regular Session) has enacted legislation which <br /> allows participating employers in the North Carolina Local Governmental Employees' <br /> Retirement System to elect a method of income tax sheltering the 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 /> 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%6 <br /> Before tax sheltering of member contributions under this new law can become <br /> applicable to employees of a participating employer, the governing body of the local <br /> government must elect the arrangement. The election can be effective only on and <br /> after July L 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 /> If a participating employer elects to tax shelter employees' contributions to <br /> the Local Governmental Employees' Retirement System, the following steps need to <br /> be taken: <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 /> (3) The employer's payroll office must: <br /> (a) deduct from the gross salary of an employee the required <br /> 6% retirement contribution; <br /> (OVER) <br /> 325 N. SALISBURY STREET., RALEIGH, NORTIi CAROLINA 27614 161'J1 7333 4091 <br />