2001-10-17 CC - Laserfiche WebLink

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Deferred Compensation Update October 5, 2001 Prepared by Mary Capra If possible bring the information 1 gave members at our last meeting regarding the deferred compensation to 10/10/01 council meeting. Following the council's approval I began making calls to investigate how we can rectify the issues regarding the City ofCenterville's current deferred compensation cash benefit offered to its employees. Below you will find a synopsis of my findings. I would like to discuss with the council the options we have and make decisions on moving forward to rectifying this issue. League of Minnesota Cities: I spoke extensively with Erin Rian concerning the benefits currently offered to employees ofthe city. She concurs the deferred compensation is not being administered correctly based on the information she has received. She stated we have four different areas in which we (the city) need to find guidance in correcting this issue. They are: . IRS - Office of Associate Chief Council for Employee Benefits and Exempt Status. Phone Number: 202-622-6080 . Abdo, Eick & Meyers, LLP - The city auditor. 952-835-9090 . State Deferred Compensation Program . Jim Hoeft - City attorney Erin stated the LMC could and would only give informal guidance in this matter. Abdo, Eick & Meyers, LLP: I spoke with Steve McDonald and he stated since this goes back as far as 1996 it would take approximately 3 - 4 days for his firm to come into the city and gather all the information pertaining to this issue. I inquired if the city could gather the information on all employees participating since 1996 ourselves in an effort to save the city the $80.00 per hour fees. Mr. McDonald stated this would be fine. I spoke with Teresa Bender and she stated we would be able to pull the necessary information together for the auditor. I would be willing to assist in the photo copying and gathering in an effort to alleviate additional duties onto staff at this time. Mr. McDonald stated his firm has dealt with negotiations involving the correcting of issues with the IRS and has found if the city is making a "good faith effort" to correct a situation they (IRS) usually but not always will wave the penalties relating to the mistake. The city would be responsible for both the city's portion and the employee's portion of FICA and Medicare tax and any interest. This is due to the city being the administrator ofthis program. The employee would be responsible for his or her own federal and state income tax. Mr. McDonald also stated his firm could work through not only the IRS but also the State of Minnesota to come up with a course of action to rectify this situation. PERA: The PERA amounts will need to be considered in the calculating of the amounts an employee can deposit to the deferred compensation program per year.