PERAC Opinion Increases Pensions For Some Employees

JULY 2001 - Personal Use of “Town” Vehicles May Be Included As Compensation - Employees,
who have unlimited personal use of an employer-supplied (“town”)
vehicle, for which they are not subject to any income tax, may utilize
the value of that vehicle as compensation for retirement purposes,
according to the Public Employee Retirement Administration Commission
(PERAC).

This is a significant
expansion of the agency’s opinion, issued this past January, that only
employees, whose personal use of an employer-supplied vehicle was
subject to tax, could have that value included as compensation for
retirement.

“After taking another
look, PERAC determined that eligibility for this added ‘benefit’ should
be expanded to other employees if certain conditions are satisfied (for
example, unlimited personal use),” reports Association Counsel Bill
Rehrey. “It’s important to note that the decision did not apply to
those who retired before it was issued (April 18, 2001).”

For
those who can take advantage, here’s how it would work. A town official
driving a town-owned vehicle with a fair market value of $20,000, would
be able to have it “lease-valued” at $5,600. He would be allowed to
treat $5,600 as regular compensation and pay the appropriate retirement
deductions on that amount.

The
obvious benefit would be that the $5,600 in this example would increase
the town official’s final average salary by that amount for retirement
purposes. If his average salary for his final three years was held at
that additional amount, it would increase his pension (80%) by $4,480.
Not a bad deal!

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