Bill S5837-2011

Relates to treatment of member contributions in accordance with the provisions of the Internal Revenue Code

Relates to treatment of member contributions in accordance with the provisions of the Internal Revenue Code; provides that contributions made by members of the New York state and local police and fire retirement system shall be picked up by their employers and treated as employer contributions for tax purposes; provides that employee salaries shall be reduced by the amount of contributions which would be mandatory without the employer pick up.

Details

Actions

  • Jun 22, 2011: SUBSTITUTED BY A7605A
  • Jun 22, 2011: ORDERED TO THIRD READING CAL.1520
  • Jun 21, 2011: REFERRED TO RULES

Votes

Memo

BILL NUMBER:S5837

TITLE OF BILL: An act to amend the retirement and social security law and the tax law, in relation to the treatment of member contributions in accordance with the provisions of the Internal Revenue Code

PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to align the contributions made by members of the New York State and Local police and Fire retirement system pursuant to Tier V with the Federal internal revenue code.

SUMMARY OF SPECIFIC PROVISIONS: Sections one of this bill would treat member contributions as part of a member's salary for tax purposes.

JUSTIFICATION: Similar provisions exist with regard to all other NYS retirement systems which require contributions,

PRIOR LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: See fiscal note.

EFFECTIVE DATE: Immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 5837 2011-2012 Regular Sessions IN SENATE June 21, 2011 ___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the retirement and social security law and the tax law, in relation to the treatment of member contributions in accordance with the provisions of the Internal Revenue Code THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The retirement and social security law is amended by adding a new section 1204-a to read as follows: S 1204-A. PICK UP OF MEMBER CONTRIBUTIONS BY EMPLOYER. A. NOTWITH- STANDING ANY OTHER PROVISION OF LAW, EACH PARTICIPATING EMPLOYER SHALL PICK UP THE MEMBER CONTRIBUTIONS REQUIRED TO BE MADE UNDER SECTION TWELVE HUNDRED FOUR OF THIS ARTICLE BY ITS EMPLOYEES AND SHALL DO SO BY REDUCING THE SALARY OF EACH OF ITS EMPLOYEES TO WHICH THIS SECTION IS APPLICABLE BY THAT AMOUNT WHICH EACH SUCH EMPLOYEE IS REQUIRED TO CONTRIBUTE UNDER SECTION TWELVE HUNDRED FOUR OF THIS ARTICLE. THE CONTRIBUTIONS SO PICKED UP SHALL BE PAID BY EACH PARTICIPATING EMPLOYER IN LIEU OF THE MEMBER CONTRIBUTIONS TO BE PAID BY ITS EMPLOYEES UNDER THIS SECTION AND SHALL BE TREATED AS EMPLOYER CONTRIBUTIONS IN DETERMIN- ING INCOME TAX TREATMENT UNDER SECTION 414(H) OF THE INTERNAL REVENUE CODE. WITH THE EXCEPTION OF FEDERAL INCOME TAX TREATMENT, THE MEMBER CONTRIBUTIONS PICKED UP PURSUANT TO THIS SUBDIVISION SHALL FOR ALL OTHER PURPOSES, INCLUDING COMPUTATION OF RETIREMENT BENEFITS AND CONTRIBUTIONS BY EMPLOYERS AND EMPLOYEES, BE DEEMED EMPLOYEE SALARY. B. ANY EMPLOYEE (SUBJECT TO THIS ARTICLE) OF A PARTICIPATING EMPLOYER WHO, IN LIEU OF JOINING A PUBLIC RETIREMENT SYSTEM OF THE STATE, ELECTED AN OPTIONAL RETIREMENT PROGRAM TO WHICH THEIR EMPLOYERS ARE THEREBY REQUIRED TO CONTRIBUTE SHALL, IN ORDER FOR THE PROVISIONS OF THIS SUBDI- VISION TO APPLY, BE REQUIRED TO EXECUTE A SALARY REDUCTION AGREEMENT (IN ACCORDANCE WITH THE REGULATIONS PROMULGATED UNDER SECTION 403(B) OF THE INTERNAL REVENUE CODE) IN AN AMOUNT EQUAL TO THE EMPLOYEE CONTRIBUTIONS
WHICH WOULD OTHERWISE BE MANDATORY UNDER THE PROVISIONS OF STATE LAW. WITH THE EXCEPTION OF FEDERAL INCOME TAX TREATMENT, THE EMPLOYEE CONTRIBUTIONS PICKED UP OR PAID PURSUANT TO THIS SUBDIVISION SHALL FOR ALL OTHER PURPOSES, INCLUDING COMPUTATION OF RETIREMENT BENEFITS AND CONTRIBUTIONS BY EMPLOYERS AND EMPLOYEES, BE DEEMED EMPLOYEE SALARY. NOTHING CONTAINED IN THIS SUBDIVISION SHALL BE CONSTRUED AS SUPERSEDING ANY PROVISION OF LAW WHICH LIMITS THE SALARY BASE FOR COMPUTING RETIRE- MENT BENEFITS PAYABLE BY A PUBLIC RETIREMENT SYSTEM. S 2. Paragraph 4 of subdivision f of section 517 of the retirement and social security law, as amended by chapter 783 of the laws of 1988, is amended to read as follows: 4. The provisions of this subdivision [f] shall not apply to a police/fire member WHO IS A MEMBER OF EITHER THE NEW YORK CITY POLICE PENSION FUND OR THE NEW YORK CITY FIRE DEPARTMENT PENSION FUND or a member of the New York city employees' retirement system who is a member of the uniformed correction force or of the uniformed force of the department of sanitation, as defined in subdivisions thirty-nine and sixty-two of section 13-101 of the administrative code of the city of New York. S 3. Paragraph 26 of subsection (b) of section 612 of the tax law, as amended by chapter 681 of the laws of 1992, is amended to read as follows: (26) The amount of member or employee contributions to a retirement system or pension fund picked up or paid by the employer pursuant to subdivision f of section five hundred seventeen [or], subdivision d of section six hundred thirteen OR SECTION TWELVE HUNDRED FOUR-A of the retirement and social security law or section 13-225.1, 13-327.1, 13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of New York or subdivision nineteen of section twenty-five hundred seven- ty-five of the education law. S 4. Subparagraph (B) of paragraph 2 of subsection (b) of section 671 of the tax law, as amended by chapter 312 of the laws of 1997, is amended to read as follows: (B) Any member or employee contributions to a retirement system or pension fund picked up by the employer pursuant to subdivision f of section five hundred seventeen [or], subdivision d of section six hundred thirteen OR SECTION TWELVE HUNDRED FOUR-A of the retirement and social security law or section 13-225.1, 13-327.1, 13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of New York or subdivi- sion nineteen of section twenty-five hundred seventy-five of the educa- tion law and any member or employee contributions to a retirement system or pension fund picked up or paid by the employer for members of the Manhattan and Bronx surface transportation authority pension plan and treated as employer contributions in determining income tax treatment under section 414(h) of the Internal Revenue Code. S 5. Subsection (c) of section 1 of subsection (c) of section 1340 of the tax law, as amended by chapter 312 of the laws of 1997, is amended to read as follows: (c) Wages. Wages shall mean wages as defined in subsection (a) of section thirty-four hundred one of the internal revenue code, except that (1) wages shall not include payments for active service as a member of the armed forces of the United States and shall not include, in the case of a nonresident individual or partner of a partnership doing an insurance business as a member of the New York insurance exchange described in section six thousand two hundred one of the insurance law, any item of income, gain, loss or deduction of such business which is
such individual's distributive or pro rata share for federal income tax purposes or which such individual is required to take into account sepa- rately for federal income tax purposes and (2) wages shall include (i) the amount of member or employee contributions to a retirement system or pension fund picked up by the employer pursuant to subdivision f of section five hundred seventeen [or], subdivision d of section six hundred thirteen OR SECTION TWELVE HUNDRED FOUR-A of the retirement and social security law or section 13-225.1, 13-327.1, 13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of New York or subdivi- sion nineteen of section twenty-five hundred seventy-five of the educa- tion law, (ii) the amount deducted or deferred from an employee's salary under a flexible benefits program established pursuant to section twen- ty-three of the general municipal law or section one thousand two hundred ten-a of the public authorities law, (iii) the amount by which an employee's salary is reduced pursuant to the provisions of subdivi- sion b of section 12-126.1 and subdivision b of section 12-126.2 of the administrative code of the city of New York, and (iv) the amount of member or employee contributions to a retirement system or pension fund picked up or paid by the employer for members of the Manhattan and Bronx surface transportation authority pension plan and treated as employer contributions in determining income tax treatment under section 414(h) of the Internal Revenue Code. S 6. Nothing contained in this act shall be construed to create any contractual right with respect to members and employees to which it applies. The provisions of this act are intended to afford members and employees the advantages of certain benefits contained in the Internal Revenue Code, and the effectiveness and existence of this act and the benefits it confers are completely contingent thereon. S 7. This act shall take effect at the beginning of the first payroll period following sixty days after the retirement system covered by this act shall receive an Internal Revenue Service ruling stating that the employee contributions covered by this act are not includible in the gross income of the employee until distributed or made available to the employee and shall remain in full force and effect only as long as such treatment of such employee contributions is authorized pursuant to the provisions of the Internal Revenue Code; provided that the state comp- troller shall notify the legislative bill drafting commission upon the occurrence of such ruling and upon any change in the provisions of the Internal Revenue Code affecting the provisions of this act in order that the commission may maintain an accurate and timely effective data base of the official text of the laws of the state of New York in furtherance of effecting the provisions of section 44 of the legislative law and section 70-b of the public officers law; provided further, however, that the amendments to subdivision f of section 517 of the retirement and social security law, paragraph 26 of subsection (b) of section 612, subparagraph (B) of paragraph 2 of subsection (b) of section 671 and subsection (c) of section 1 of subsection (c) of section 1340 of the tax law made by sections two, three, four and five of this act shall not affect the expiration of such provisions and shall be deemed to expire therewith. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would require participating employers to pick up, within the meaning of section 414(h) of the Internal Revenue Code, the 3% contrib- utions required of Tier 5 members of the New York State and Local Police and Fire Retirement System. The pick up of contributions shall be made by a reduction in each affected member's salary by an amount equal to

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