Termination Pay Tax Program Announcement
Updated On: May 138, 2006

Some employees received a notice with pay stubs describing changes to the County Termination Pay Plan (TPP) offered by the 457 (Great West) plan. It appears that the IRS is posturing to issue a negative ruling on tax deferment of termination pay and the County is going to abandon the plan. Termination pay is benefit time paid to employees (Vacation, Sick hours) that are paid usually at time of retirement as a lump sum. Termination pay is different than payments made annually for excess benefit time and was allowed - via the Termination Pay Plan - to be rolled into your 457 plan, an IRA or used to pay the purchase ARC time through LACERA.

The letter dated April 28 from CAO David Janssen allows for employees to sign up for the plan, with proper education and counseling, regardless of the known outcome of the plan. There are several dates and times given for locations of educational seminars on the Termination Pay Plan.

Local 1014's advice to its members that have NOT enrolled into the Termination Pay Plan is that they do NOT enroll - throw away the letter. Our reasoning is that it is unknown how the IRS will eventually rule on the Termination Pay Play. There are scenarios that could result in the employee being fined, and paying excessive interest and penalties to the IRS.

If you HAVE enrolled in the Termination Pay Plan as a tax deferment vehicle through a 401(a) rollover, please call Great West at 800-382-8924 and schedule an appointment with a Great West representative and discuss your options. If you used termination pay to buy ARC time through LACERA - contact LACERA immediately at 626-564-6000.

If you have any questions about the Termination Pay Plan, Please call Will Pryor at 310-639-1014 or e-mail to willp@local1014.org. (Until negotiations are over e-mail will be quicker).


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