04-26-2006 Council Agenda - Laserfiche WebLink

Home Browse Search

New Features Since developing RHS, the ICMA Retirement Corporation has sought to enhance the features to make the program even more flexible for employers and employees. ICMA -RC's outside employee benefits legal counsel, Groom Law Group, has developed an opinion letter at ICMA -RC's request, providing the foundation for employer adoption of some significant additional provisions for the RHS Plan. Participation One -time irrevocable election to participate - An eligible employee may make a one -time irrevocable elec- tion to participate in the plan. Until such time as the election is made, the individual may not participate in the plan. Once made, the election is irrevocable and the employee may not opt out of the program. Contributions Irrevocable employee pre -tax contribution - A participating employee may make a single irrevocable elec- tion to make ongoing contributions from compensation of a specified dollar or percentage amount on a pre- tax basis. The participating employee may also irrevocably elect to make contributions of a specified amount of accrued sick and vacation leave, typically at retirement. Once the election is made, it is irrevocable and may not be changed. .1 . ee voluntary after -tax contributions - Employee after -tax voluntary contributions may com•ris- • • 25% of the over • .1._ '•. to the plan for each calendar year. (For • •• -- _ •- - - fining the 25% limit, after -tax contributions are measure• . •s;...- - -a..1 • ri•ution types listed in this summary: direct employer contrib, eave contributions, mandatory e • •.:, •. 'sutions, irrevocable n contributions, and annual irrevocable prospective leave contributions.) Annual, irrevocable election of contribution of prospective leave accruals — Each year, employees are per- mitted to irrevocably elect to contribute all or a portion of the upcoming year's accrual of vacation and /or sick leave to VantageCare RHS. No specific dollar or percentage limitation is required for RHS plan contributions (other than for after -tax contributions), although limitations are suggested in the opinion. The employer may establish limits by con- tribution type, or at an overall level. The opinion letter on these enhancements states that, while there is no direct Internal Revenue Service authority with respect to the issues covered, and while it is possible that a court or the IRS could reach dif- ferent conclusions, the provisions should stand if challenged. Employers may wish to refer the opinion let- ter, available on request to interested employers, to outside benefits counsel for review prior to adoption of the provisions outlined above. Copies of the private letter ruling and the opinion of outside counsel referred to above are available to employers on request. 777 North Capitol Street, NE, Washington, DC 20002 -4240 • 1- 800 - 299 -9249 • www.icmarc.org F LY000- 093 - 200206 -07 53