Prior to 2014, ACERA allowed members to purchase service credit
through pre-tax payroll deductions for certain ineligible
employment with our participating employers, as well as redeposit
their contributions from prior memberships. For years, the IRS
approved pre-tax service credit purchases through payroll
deductions based upon the pre-tax provisions in Internal Revenue
Code (section 414(h)(2)).
The reforms proposed in Assembly Bill 340 (AB340) this summer (as
previously reported by ACERA) were amended in September and then
withdrawn entirely when the California State Legislature opted to
convene a Joint Legislative Conference Committee on Public
Employee Pensions in late October. The Committee,
co-chaired by State Senator Gloria Negrete McLeod (D-Montclair)
and South Bay Assemblyman Warren Furutani (also a Democrat), will
hold its next public hearing on December 1 in Sacramento.