RESOLUTION NO. 2023-001
TAX SHELTER PLAN RESOLUTION
WHEREAS, (Governing Board) wishes to provide maximum benefits to its employees within the limits of its budget; and
WHEREAS, employees of the Town of Berlin are members of the Employees’ Retirement System of Alabama and under the current mandatory contribution procedure five percent (5%) [six percent (6%) for certified Firefighters/Law Enforcement Officers] for Tier 1 members and six percent (6%) [seven percent (7%) for certified Firefighters/Law Enforcement Officers] for Tier 2 members of each employee’s salary is deducted from his or her paycheck and paid into the Employees’ Retirement System of Alabama; and those contributions so deducted are currently fully taxable as income to the employee under federal tax laws; and
WHEREAS, §414(h)(2) of the Internal Revenue Code provides that such contributions may be excluded from the employee’s gross income if these contributions are “picked-up” by the employer;
NOW, THEREFORE, BE IT RESOLVED by the Town of Berlin that the salary of each employee who participates in the Employees’ Retirement System shall be adjusted so that the Town of Berlin as employer, shall pay on behalf of each and every one of such employees for each and every payroll period beginning on or after 01/01/2023), that employee’s contribution to the Employees’ Retirement System of Alabama as required by §36-27-24 of the Code of Alabama 1975; that such payment on behalf of each employee of that employee’s contribution to the Employees’ Retirement System of Alabama shall be in lieu of any deduction from the employee’s salary of said contribution; and
BE IT FURTHER RESOLVED that the employee contributions which are “picked-up” will continue to be designated employee contributions for purposes of the Employees’ Retirement System of Alabama; that the employee contributions which are “picked-up” shall be a part of the employee’s compensation for determining the amount of the contribution to be so “picked-up”; that the total amount of the contribution of each member employee to the Employees’ Retirement System of Alabama shall not be reduced by this Resolution; that the amount of the retirement allowance of each member shall not be affected by this Resolution; that no other changes in the method of computation and transmittal of these “picked-up” employee contributions shall be affected hereby; and that the total amount paid to and on behalf of each member employee will not be increased hereby.
BE IT FURTHER RESOLVED that the system whereby the employee’s contributions to the Employees’ Retirement System of Alabama is “picked-up” shall apply equally to each and every such employee who participates in the Employees’ Retirement System; that no such employee shall be given any option concerning this “pick-up”; that this system of “pick-up” shall be mandatory on all such employees.