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COUNTY OF SAN MATEOInter-Departmental Correspondence |
County Counsel |
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DATE: |
March 15, 2004 |
BOARD MEETING |
April 6, 2004 |
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TO: |
Honorable Board of Supervisors |
FROM: |
Thomas F. Casey III, County Counsel |
SUBJECT: |
Money Purchase Retirement Plan And Trust And An Agreement With ICMA Retirement Corporation To Administer A Money Purchase Retirement Plan Benefit |
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Recommendation |
Adopt A Resolution Authorizing The Execution Of A Money Purchase Retirement Plan And Trust And An Agreement With ICMA Retirement Corporation To Administer A Money Purchase Retirement Plan Benefit
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Background |
Federal and State tax laws, and the 37 Act, limit the annual compensation that can be used to determine benefits in SamCERA. All County employees who were hired before July 1, 1996 are "grandfathered", but employees who are hired after that date are subject to this limit. In 2004, the annual compensation limit for SamCERA per employee is $205,000. This amount gradually increases with inflation but at a rate that is slower than the general CPI increase.
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If these limits are not met, SamCERA can lose its qualified tax status. Consequently, SamCERA will not accept contributions on compensation earnable over the I.R.S. limit and will not pay benefits on compensation earnable over the I.R.S. limit. For those employees hired after June 30, 1996,who earn over that amount, "make up" contributions to compensate for benefits lost under SamCERA will be placed in a Money Purchase Retirement Plan. |
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Discussion |
The documents presented for your approval set up a Money Purchase Retirement Plan and Trust which will be administered by the ICMA Retirement Corporation. Each year the County will contribute to the Money Purchase Retirement Plan and Trust for certain employee participants. The employee participants are designated in the plan documents as well as the amount of the County's annual contribution. The resolutions also authorizes the County Manager to manage the administration of the Plan as necessary. |
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Vision Alignment |
Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
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Fiscal Impact |
The amount of the contributions to the Money Purchase Retirement Plan and Trust is the same amount that the County would have contributed to SamCERA for the benefits that cannot be paid under that plan. Fees are charged to the participant based on the fund selection.
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