Part G: Joining the Trust/Funding

A PORAC member Association can join the Trust by entering into an MOU with its employer, which generally mandates (though not always) contributions to the Trust in the same amount for every employee in the bargaining unit. The MOU can provide for employer contributions on behalf of employees, and/or to take pre-tax deductions from employees’ paychecks to pay into the Trust (or both). In order to comply with IRS guidelines, there can be no individual election to enroll, and the contributions by or on behalf of employees generally must be the same for all members of the bargaining unit. 

• Monthly contributions from salary.
  • $100 minimum per employee per month. An Association may join with contributions in any $25 increment, starting at least at $100/month per employee per month.  There can be no individual election either to participate or the contribution level.  Currently, Associations have bargained a range of $100 to $750 per employee per month.
  • Special rate of $50 for 12 months. An Association may use a contribution rate of $50/employee per month for no more than twelve months.
• Changes in Contribution Rate Allowed
  Each Association is allowed to change its contribution in increments of $25 at any time, as set forth in your MOU, or side letter.
• Contribution of sick or vacation leave in the form of a Lump-Sum transfer to Individual Accounts.
  An An Association may also join by negotiating an automatic transfer of its members’ accrued sick and/or vacation leave to the Trust for deposit into Individual Accounts. The Trust will accept deposits of accrued sick/vacation leave at retirement or once a year, if negotiated in the MOU at a uniform percentage (e.g., 50% of accumulated sick leave; 100% of accumulated sick leave, etc.) for all individuals in the bargaining unit. These amounts will not be taxable income to the employee (as they would be if the employee receives them in cash). These amounts will be credited to the participant’s Individual Account in the Trust.

No, individual increases (or decreases) in contributions are not allowed. The IRS prohibits individual election, including for contribution increases; any violation will jeopardize the Trust’s tax advantages. (The only exception is COBRA contributions.)

No, there is no individual election to participate in the Trust.  Generally, either the entire bargaining unit must participate, or no one may participate.  The tax advantages of the Trust depend on the absence of individual election.  However, as discussed in part A1, you may carve out part of the bargaining unit to participate, e.g., new hires. These requirements are set by the IRS.