§ 5547 — Employer pickup of employee contributions

(a) Each participating employer, pursuant to the provisions of § 414(h)(2) of the United States Internal Revenue Code [26 U.S.C. § 414 (h)(2)], shall pick up and pay the contributions which would otherwise be payable by the employees under § 5543 of this title. The contributions so picked up shall be treated as employer contributions for purposes of determining the amounts of federal income taxes to withhold from the employee’s compensation.

(b) Employee contributions picked up by the employer shall be paid from the same source of funds used for the payment of compensation to an employee. A deduction shall be made from each employee’s compensation equal to the amount of the employee’s contributions picked up by the employer. This deduction, however, shall not reduce the employee’s compensation for purposes of computing benefits under the retirement system pursuant to this chapter.

(c) Employee contributions shall be credited to a separate account within the employee’s individual account so that the amount contributed prior to the effective date for the pickup of employee contributions may be distinguished from the amounts contributed on or after the effective date.

(d) The contributions, although designated as employee contributions, are being paid by the employer in lieu of the contributions by the employee. The employee will not be given the option of choosing to receive the contributed amounts directly instead of having them paid by the employer to the retirement system.

Legislative History

68 Del. Laws, c. 358, § 1