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TO: Local 17 Member
FROM: Diana Douglas, Adrienne Thompson, Patti Kieval, Guadalupe Perez
RE: Voluntary Employees Benefits Association (VEBA)
DATE: September 20, 2007
_____________________________________________________________________________
WHAT IS VEBA? IFPTE Local 17 negotiated a VEBA benefit (Voluntary Employees Benefit Account). The VEBA benefit is a medical savings account designed to help defray medical expenses when you retire. The Internal Revenue Service (IRS) allows such money to be put into the account without taxes taken out of it, and allows the money to be withdrawn for medical expenses (as defined by the IRS) without paying taxes on it. It can be used only for IRS-allowed medical and health expenses. See enclosed Summary of Benefits for more information.
WHAT EXACTLY DID LOCAL 17 NEGOTIATE ON MY BEHALF? Prior to the 2005 Ð 2007 contract negotiations, City employees were allowed to cash out 25 percent of their remaining sick leave at retirement. Local 17 negotiated a benefit that allows its members the option to cash out 35 percent of sick leave at retirement if employees vote to contribute sick leave at retirement into a VEBA account. If members do not select VEBA, our membership can now contribute 35 percent (as opposed to 25 percent) of their remaining sick leave at retirement into deferred compensation. Both negotiated benefits provide members with a huge tax savings.
WHY IS THERE A VOTE? The IRS requires that either all or none of the retiring employees in our group during the period in question must participate in the VEBA plan. The way to determine if the group will participate is through a ballot. The purpose of this letter and ballot is to give all people in Local 17Õs bargaining unit who are eligible to retire between January 1, 2008 and the end of this contract period (December 31, 2010) the opportunity to vote on whether or not to implement VEBA during this period.
WHAT HAPPENS IF THE GROUP
VOTES YES/NO?
YES VOTE: If the eligible-to-retire members of
the bargaining unit vote to accept the VEBA, then
all members of the bargaining unit who retire from City service from January 1,
2008 until December 31, 2010, shall either place their sick leave cash out
at 35% into their VEBA account, or forfeit the sick leave cash out
altogether. There is no minimum
threshold for the sick leave cash out.
(Members are not eligible to deposit their sick leave cash out into
their deferred compensation account or receive cash under this scenario)
NO VOTE: If the eligible-to-retire members of the bargaining unit vote to reject the VEBA, all members of the bargaining unit who retire from City service from January 1, 2008 to December 31, 2010, shall be ineligible to place their sick leave cash out into a VEBA account. Instead, these members shall have two choices:
a. Members can cash out their sick leave balance at 35% and deposit those dollars into their deferred compensation account. The annual limits for the deferred compensation contributions as set by the IRS would apply; or,
b. Members can cash out their sick leave balance at 25% and receive the dollars as cash on their final paycheck.
.
WHO IS ELIGIBLE TO VOTE? It is up to you to self identify and certify (by voting) that you meet one of the following minimum eligibility requirements set forth by the retirement system. In addition to the eligible time you have served as a City of Seattle employee, some of you may also have accrued creditable time towards retirement working for the State of Washington, King County, the Port of Seattle, or another local municipality who has retirement portability with the City of Seattle.
If your time with the City and any other eligible portable time listed above combines to equal:
á 5 Ð 9 years of service and are age 62 or older;
á 10 Ð 19 years of service and are age 57 or older;
á 20 Ð 29 years of service and are age 52 or older; or,
á 30 years of service and are any age,
you are eligible to return the enclosed ballot.
NOTE: Members who have been employed by other public employers, may have portable retirement service credit that may count towards retirement with the City of Seattle. Please call your union representative if you have questions.
Members who do NOT meet the eligible-to-retire criteria may cash out their sick leave at 25% in accordance with the sabbatical benefit.
VOTING INSTRUCTIONS. If you are eligible to vote:
Mark ballot to indicate your choice. Any marks on ballot other than votes could invalidate the ballot.
Place ballot in envelope marked ÔBallotÓ. Do NOT write on ÒBallotÓ envelope.
Place the ÒBallotÓ envelope into the envelope addressed to Local 17 (outer envelope). Print your full name on the outer envelope and write City of Seattle in the ÒEmployerÓ section. If you fail to print your name, your ballot will not be counted. This will be used for validation of your eligibility to vote. The confidentiality of your ballot will be protected by the ÒBallotÓ envelope. THIS IS A SECRET BALLOT ELECTION.
Place the pre-paid envelope addressed to Local 17 in the mail.
Ballots must be postmarked no later than Friday, October 13, 2007.
NOTE: You need not be planning to retire by December 31, 2008 to vote Ð you need only be eligible to do so.
If you are not eligible to vote, please do not return the enclosed ballot.