IMPLEMENTATION OF INTERNAL REVENUE CODE SECTION 414(h)(2)

Los Angeles Administrative Code div. 4, ch. 15

in effect

Los Angeles Administrative Code § 4.1500 Purpose of Chapter.

Sec. 4.1500. Purpose of Chapter. The purpose of this chapter is to implement the provisions contained in Section 414(h)(2) of the Internal Revenue Code of the United States concerning the tax treatment of employee contributions paid by the City on behalf of affected employees. Pursuant to Section 414(h)(2) contributions to a pension plan, although designated under the plan as employee contributions, when paid by the employer in lieu of contributions by the employee, under circumstances in which the employee does not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer, may be excluded from the gross income of the employee until these amounts are distributed or made available to the employee. Implementation of Section 414(h)(2) is accomplished through a reduction in wages pursuant to the provisions of this chapter. SECTION HISTORY Added by Ord. No. 160,500, Eff. 12-21-85, Oper. 12-22-85.

Los Angeles Administrative Code § 4.1501 Definition.

Sec. 4.1501. Definition. Unless the context otherwise requires, the definitions in this section govern the construction of this chapter. (a) “Affected employees” shall mean those employees of the City of Los Angeles who make employee contributions to a retirement system. (b) “Employee contributions” shall mean those contributions to a retirement system which are deducted from the salary of employees and credited to individual employees’ accounts. (c) “Employer” shall mean the City of Los Angeles. (d) “Gross income” shall mean the total compensation paid to affected employees by the City of Los Angeles as defined in the Internal Revenue Code and rules and regulations established thereunder. (e) “Retirement system” shall mean the Los Angeles City Employees’ Retirement System as set forth in Article XI of the Charter of the City of Los Angeles. (f) “Wages” shall mean the total compensation earned by affected employees from the City of Los Angeles. SECTION HISTORY Added by Ord. No. 160,500, Eff. 12-21-85, Eff. 12-22-85. Amended by: Subsec. (e), Ord. No. 173,272, Eff. 6-25-00, Oper. 7-1-00.

Los Angeles Administrative Code § 4.1502 Pick Up of Employee Contributions.

Sec. 4.1502. Pick Up of Employee Contributions. (a) Pursuant to provisions of Section 4.1503 of this chapter the employer shall make employee contributions on behalf of affected employees, and such contributions shall be treated as employer contributions in determining tax treatment under the Internal Revenue Code. Such contributions shall be made by the employer in lieu of employee contributions. (b) Employee contributions made under Subsection (a) of this section shall be paid from the same source of funds as is used in paying wages to affected employees. (c) For all purposes other than taxation, employee contributions made by the employer under Subsection (a) of this section shall be treated in the same manner and to the same extent as employee contributions made prior to the operative date of this chapter. (d) No provisions in this chapter shall be construed so as to permit or extend an option to affected employees to directly receive the contributions made by the employer pursuant to Subsection (a) of this section instead of having them paid to a retirement system. SECTION HISTORY Added by Ord. No. 160,500, Eff. 12-21-85, Oper. 12-22-85.

Los Angeles Administrative Code § 4.1503 Wage Adjustment.

Sec. 4.1503. Wage Adjustment. Notwithstanding any other provision of this Code, the wages of affected employees shall be reduced by the amount of any employee contributions made by the employer pursuant to the provisions of this chapter. SECTION HISTORY Added by Ord. No. 160,500, Eff. 12-21-85, Oper. 12-22-85.

Los Angeles Administrative Code § 4.1504 Limitation to Operability.

Sec. 4.1504. Limitation to Operability. This chapter shall be operative only so long as the City’s pick up of employee’s contributions continues to be excludable from the gross income of the affected employees under the provisions of the Internal Revenue Code. SECTION HISTORY Added by Ord. No. 160,500, Eff. 12-21-85, Oper. 12-22-85.

Los Angeles Administrative Code § 4.1505 Purpose of Chapter Amendment.

Sec. 4.1505. Purpose of Chapter Amendment. The purpose of this amendment is to implement the provisions of Section 414(h)(2) of the Internal Revenue Code, which permits employees to tax-defer their pension contributions until such contributions are distributed or made available to the employee, for sworn members of the Fire and Police Pension System. Implementation of Section 414(h)(2) is accomplished through a reduction in wages pursuant to the provisions of this chapter. SECTION HISTORY Added by Ord. No. 171,444, Eff. 1-20-97. (The provisions of this Ord. shall not become operative until the first day of the payroll period which includes January 1, 1997.)

Los Angeles Administrative Code § 4.1506 Definitions.

Sec. 4.1506. Definitions. Unless the context otherwise requires, the definitions in this section govern the construction of this chapter. (a) “Affected employees” shall mean those sworn employees of the City of Los Angeles who make employee contributions to the Fire and Police Pension System. (b) “Employee contributions” shall mean those contributions to the pension system which are deducted from the salary of sworn employees and credited to individual employees’ accounts. (c) “Employer” shall mean the City of Los Angeles. (d) “Gross income” shall mean the total pension-based compensation paid to affected employees by the City of Los Angeles as defined in the Internal Revenue Code and rules and regulations established thereunder. (e) “Pension system” shall mean the Fire and Police Pension Plans as set forth in Article XI, Part 3 of the Charter of the City of Los Angeles. (f) “Wages” shall mean the total pension-based compensation earned by affected employees from the City of Los Angeles. SECTION HISTORY Added by Ord. No. 171,444, Eff. 1-20-97. (The provisions of this Ord. shall not become operative until the first day of the payroll period which includes January 1, 1997.) Amended by: Subsec. (e), Ord. No. 173,272, Eff. 6-25-00, Oper. 7-1-00.

Los Angeles Administrative Code § 4.1507 Pick-Up of Employee Contributions.

Sec. 4.1507. Pick-Up of Employee Contributions. (a) Pursuant to the provisions of Section 4.1508 of this chapter, the employer shall make employee contributions on behalf of affected employee, and such contributions shall be treated as employer contributions in determining tax treatment under the Internal Revenue Code. Such contributions shall be made by the employer in-lieu of employee contributions. (b) Employee contributions made under Subsection (a) of this section shall be paid from the same source of funds as is used in paying wages to affected employees. (c) For all purposes other than taxation, employee contributions made by the employer under Subsection (a) of this section shall be treated in the same manner and to the same extent as employee contributions made prior to the operative date of this chapter. (d) No provisions in this chapter shall be construed so as to permit or extend an option to affected employees to directly receive the contributions made by the employer pursuant to Subsection (a) of this section instead of having such contributions paid to a pension system. SECTION HISTORY Added by Ord. No. 171,444, Eff. 1-20-97. (The provisions of this Ord. shall not become operative until the first day of the payroll period which includes January 1, 1997.)

Los Angeles Administrative Code § 4.1508 Wage Adjustment.

Sec. 4.1508. Wage Adjustment. Notwithstanding any other provision of this Code, the wages of affected employees shall be reduced by the amount of any employee contributions made by the employer pursuant to the provisions of this chapter. SECTION HISTORY Added by Ord. No. 171,444, Eff. 1-20-97. (The provisions of this Ord. shall not become operative until the first day of the payroll period which includes January 1, 1997.)

Los Angeles Administrative Code § 4.1509 Limitation to Operability.

Sec. 4.1509. Limitation to Operability. This chapter shall be operative only so long as the City’s pick-up of employee contributions continues to be excludable from the gross income of the affected employees under the provisions of the Internal Revenue Code. SECTION HISTORY Added by Ord. No. 171,444, Eff. 1-20-97. (The provisions of this Ord. shall not become operative until the first day of the payroll period which includes January 1, 1997.)

Source: City of Los Angeles, Charter and Codes (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/los_angeles/latest/laac/0-0-0-17226Fetched: 10/24/2026