Sec. 6.02. PICKUP OF MEMBER CONTRIBUTIONS. (a) As provided by Section 414(h)(2), Internal Revenue Code of 1986 (26 U.S.C. Section 414(h)(2)), the municipality shall pick up and pay a member's required contribution. Although the contributions so picked up are designated as member contributions, the contributions shall be treated as contributions being paid by the municipality in lieu of contributions by the member for determining tax liability under the Internal Revenue Code of 1986 and are not included in the gross income of the member until the amounts are distributed or made available to the member or the member's beneficiary. The member may not choose to receive the picked-up contributions directly, and the picked-up contributions must be paid by the municipality to the fund.

(b) Member contributions picked up under Subsection (a) of this section are included in the compensation of the member for purposes of determining benefits and contributions under the fund.

(c) The municipality shall pay the member contributions from the same source of funds used in paying compensation to the member by reducing the gross compensation of the member.