154-2000 LTC
~ITY OF ,M'AM' BEACH
:\Tv HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
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C 154-2000
L.T. . No.
LETTER TO COMMISSION
August 3, 2000
FROM:
Mayor Neisen O. Kasdin and
Members of the City Commission
Lawrence A. Levy Q ~r&
City Mana~
Social Se~~ for Classified and "Other" Probationary Employees
TO:
SUBJECT:
Currently classified and "other" probationary employees are in a 457 Deferred Compensation
Pension Plan. The employee contributes 7,5% of his /her annual salary into the plan and the City
contributes 2.5% into the individual account of the employee. The Internal Revenue Service (IRS)
has informed us that the 457 Deferred Pension Plan for classified and "other" probationary
employees is not a qualified plan under IRS regulations and that we are required to collect Social
Security for these employees during their probationary period.
Therefore, with the agreement of IRS, we expect to start deducting federal Social Security as of
October I, 2000, from classified and "other" probationary employees' salaries. This means that the
City will contribute 6.2% of an employee's salary and the employee will contribute 6.2% of his /her
salary. At the end of the probationary period, employees will make the choice to become part of I)
General Retirement System (Classified) or 2) 40lA Pension Plan.
According to the IRS, probationary police and fire employees and part-time, seasonal, and temporary
employees are not required to pay Social Security. This is because of an agreement which is called
a 218 agreement with the State of Florida, Social Security Administration, and the City of Miami
Beach which specifically excludes these employees, However, classified and "other" probationary
employees are not excluded.
There have been extensive discussions with Mr, Jim Linn, the City's Pension Attorney, Ms.
Patricia Walker, Finance Director, Ms. Georgina Echert, Assistant Finance Director, Ms. Mary
Greenwood, Executive Assistant to the City Manager/Labor Relations, and the IRS. After
reviewing our options, we believe that we have no choice but to start Social Security coverage
for these employees.
Page 2
Letter to Commission
Social Security
If you have any additional questions or concerns regarding this matter, please do not hesitate to
contact me directly,
LAL: MG: vpm
\\CH2\SYS\HUMA\LABQRREL\VPM\CommiSJion Lcttef1\Social Security Commission Letter 3-OO.doe
c: Assistant City Managers
Mary Greenwood, Executive Assistant to the City Manager/Labor Relations
Margaret Arculeo, Fire Pension Administrator
Celia Locke, Executive Director of Fire and Police Pension Funds
John Wheeler, AFSCME Acting President
Richard McKinnon, CW A President
Richard Ellis, GSA President