§ 45-21-41.1 - Municipality payment of member contributions.
SECTION 45-21-41.1
§ 45-21-41.1 Municipality payment ofmember contributions. – (a) Each municipality, pursuant to the provisions of 26 U.S.C. § 414(h)(2)of the United States Internal Revenue Code, may, pursuant to appropriate legalaction by the municipality, pick up and pay the contributions which would bepayable by the employees as members under § 45-21-41. The contributions sopicked up shall be treated as employer contributions in determining taxtreatment under the United States Internal Revenue Code; however, eachmunicipality shall continue to withhold federal and state income taxes basedupon these contributions until the Internal Revenue Service rules that pursuantto 26 U.S.C. § 414(h)(2) of the United States Internal Revenue Code, thesecontributions shall not be included as gross income of the employee until thetime they are distributed. Employee contributions which are picked up pursuantto this section shall be treated and identified as member contributions for allpurposes of the retirement system except as specifically provided to thecontrary in this section.
(b) Member contributions picked up by a municipality shall bepaid from the same source of funds used for the payment of compensation to amember. A deduction shall be made from a member's compensation equal to theamount of the employee's contributions picked up by the employee's municipalemployer. This deduction, however, shall not reduce the employee's compensationfor purposes of computing benefits under the retirement system pursuant to thischapter. Picked up contributions shall be submitted to the retirement system inaccordance with the provisions of § 45-21-41.