Union offers 457(b) catch-up plan instead of capped sick-buyback to ease retiree payouts

Union negotiators proposed a pre-retirement leave conversion program using a 457(b) catch-up mechanism rather than the current capped sick-leave buyback. Under the proposed structure, employees who elect the program in advance (typically three years prior to retirement) could defer eligible accrued time (annual leave, holiday or sick leave) into a tax-advantaged retirement vehicle within IRS limits.

Union leaders argued the change would help employees invest accrued leave tax-efficiently, smooth city cash outlays, and give the city better notice of upcoming retirements so it could plan academy classes and replacement hiring. The union said the plan can double annual elective limits during the catch-up period and can be structured to limit adverse effects when employees later revoke elections.

City budget and legal staff asked for detail on fiscal implications. They noted that early conversion reduces future city cash burdens but increases near-term deferral administration and may interact with pension formulas. The union also proposed removing a hard cap on buyback hours, while offering a mechanism that minimizes budget shocks (for example, city budgeting caps or first-come, first-served annual buyback windows).

Negotiators agreed to include age and IRS-rule compliance (age 50+ catch-up rules and special three-year provisions), to refine the mechanics (how leave is surrendered and how final hourly rates are calculated), and to run model scenarios showing net budget and pension consequences before adopting any new program.