[§88-326]  Deducting employee contributionsfrom salary and employer pick up of employee contributions.  (a)  The headof each state department and the finance director of each county shall deductfrom the compensation of each class H member on each and every payroll undertheir respective jurisdictions, the percentage of compensation of each memberas provided under section 88-325.

The total amount of deductions made from thesalaries of employees and a record of the amount deducted from each member's compensationshall be transmitted to the system semi-monthly or at other times as may beagreed upon by the board.  The amounts deducted shall be paid into the annuitysavings fund and shall be credited to the individual account of the member fromwhose compensation the deductions were made.

Regular interest shall also be credited to theindividual account of the member in the annuity savings fund.

(b)  The State and each county, pursuant tosection 414(h)(2) of the Internal Revenue Code of 1986, as amended, shall pickup and pay the contributions that would otherwise be payable by each class Hmember, including contributions designated by the member relating to theconversion or acquisition of membership service as provided under sections [88-322(d)]and 88-324, from compensation paid after December 31, 1987.  The contributionsso picked up shall be treated as employer contributions for the purpose ofdetermining the amount of federal income tax to withhold from each class Hmember's compensation.  The member shall complete a payroll authorization formbefore the period in which the contributions are earned and service isacquired, converted, or credited.  With respect to service to be acquired orconverted, the form shall be a binding irrevocable payroll deductionauthorization in which the member acknowledges that the system will not acceptdirect payment from the member while the form is in effect.

(c)  Member contributions picked up by theemployer shall be paid from the same source of funds used for the payment ofcompensation to a member.  A deduction shall be made from each class H member'scompensation equal to the amount of the member's contributions picked up by theemployer; provided that the deduction shall not reduce the member'scompensation for the purpose of computing benefits under this chapter.

(d)  Member contributions picked up by theemployer shall be transmitted to the system in accordance with subsection (a).Such contributions shall be credited to a separate account within each member'sindividual account in the annuity savings fund so that the amount contributedby the member before January 1, 1988, may be distinguished from the membercontributions picked up by the employer.  Regular interest shall also becredited to the individual account of the member in the annuity savings fund.[L 2004, c 179, pt of §1]