2016-06 Amends Res #2016-04, Leave Benefits Special Pay PlanRESOLUTION NO. 2016 -06
A RESOLUTION OF THE CITY OF OKEECHOBEE, FLORIDA,
AMENDING THE PERSONNEL POLICIES AND PROCEDURES
MANUAL, CHAPTER 3 RELATING TO RETIREMENT BENEFITS, AND
CHAPTER 4 RELATING TO DISTRIBUTION OF ANNUAL LEAVE AND
SICK LEAVE BENEFITS; PROVIDING FOR CERTAIN REIMBURSE-
MENT TO EMPLOYEES WHO ELECT TO TAKE EARLY RETIREMENT
WHICH WOULD BE SUBJECT TO PENALTIES UNDER IRS
REGULATIONS; PROVIDING FOR CONFLICT; PROVIDING FOR
SEVERABILITY; PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City of Okeechobee has adopted Resolution 2016 -04, which mandates
a pay plan policy for retiring employees whereby accrued sick leave and annual
leave due upon separation of employment may be placed with an investment
plan, and such accrued benefits, at the election of the retiree, would remain in
the investment plan until withdrawn by the retiree; and
WHEREAS, the benefit of opting to participate in the Special Pay Plan avoids an
immediate obligation to deduct, at this time, a Social Security and Medicare
withholding of 7.65 percent chargeable to both the City and the retiree; and
WHEREAS, due to circumstances personal to each retiree, it may be necessary for
such retiree to take early retirement benefits, which prior to age 59Y2 would at
this time institute a penalty by Internal Revenue Service (IRS) of 10 percent; and
WHEREAS, the City has determined that when a retiree is forced to opt for early
retirement, knowingly facing a penalty by the IRS, it is appropriate to reimburse
the retiree for a portion of the penalty; and
WHEREAS, for example under current regulations, when the retiree retires prior to age
59V2, a 10 percent penalty is imposed. As the retiree already received the benefit
of the Social Security and Medicare savings of 7.65 percent, the City will
reimburse the difference of 2.35 percent (up to the 10 percent penalty) which
sum by this Resolution will be distributed by the City to the retiree.
NOW, THEREFORE, be it resolved before the City Council for the City of Okeechobee,
Florida; presented at a duly advertised public meeting; and passed by majority
vote of the City Council; and properly executed by the Mayor or designee, as
Chief Presiding Officer for the City:
SECTION 1:
1. THAT Chapter 3, City of Okeechobee, Florida, Personnel Policies and
Procedures is hereby amended to provide under that heading RETIREMENT, to
include the following language:
SPECIAL PAY PLAN (ACCRUED LEAVE BENEFITS)
1. In the event an employee who is otherwise eligible for retirement benefits and
annual leave and sick leave, upon separation, elects for early retirement prior
to age 59'/2, an additional retirement benefit to that retiree shall be paid by the
City to the retiree the difference of the retirees Social Security and Medicare
obligation, currently 7.65 percent, and the amount of the penalty imposed by
IRS regulations, currently 10 percent. In the event future regulations should
change the percentages of Social Security and Medicare obligations and
RESOLUTION NO. 2016 -06 PAGE 1 OF 2
penalties for early retirement, this agreement to reimburse a retiree shall
continue, adjusted at the then - current percentages.
2. The benefits provided by this Resolution (No. 2016 -06) shall only apply to
those sums for annual and sick leave taken by the employee and deposited in
the City Special Pay Plan mandated by Resolution No. 2016 -04, and no other
retirement benefit.
3. In the event the City should opt out of the Special Pay Plan set forth in
Resolution No. 2016 -04 in the future, then the benefits provided by this
Resolution shall cease without further action by the City Council.
SECTION 2: CONFLICT.
All resolutions or parts of resolutions in conflict herewith are hereby repealed.
SECTION 3: SEVERABILITY.
That if any portion of this Resolution should be judicially determined to be
unenforceable, then the balance thereof shall continue to remain in full force and
effect.
SECTION 4: EFFECTIVE DATE.
This Resolution shall take effect immediately upon its adoption.
INTRODUCED AND ADOPTED in regular session this 16th day of August, 2016.
Lane Gamiotea, MC, City Clerk
REVIEWED FOR LEG L SIFJFFICIENCY:
John R. Cook, city Attorney
RESOLUTION No. 2016 -06 PAGE 2 OF 2
James E. Kirk, Mayor