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6.G. - Pa§f Red 8 od 187 <br />City <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2018 <br />NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <br />C. Cafeteria Benefit Plan <br />The City has a cafeteria benefit plan established pursuant to section 125 of the IRS code. Under this <br />plan eligible employees may direct a contribution, made by the City or elect to contribute pre-tax <br />dollars, into any combination of the following three benefit categories: <br />1. Medical Insurance Premium Account <br />2. Out of Pocket Medical Spending Account <br />3. Dependent Care Spending Account <br />Under no circumstances may an employee direct more than $5,000 annually into the Dependent Care <br />Spending Account and $2,550 annually into the Medical Spending Account. This cap applies to both City <br />contributions and employee pre-tax contributions. There are no legal limits on contributions to the <br />Health Premium Account. <br />All regular full-time and part-time employees employed on a regular and continuous basis, including <br />certain contractual employees, are eligible to participate in this plan. Temporary and casual employees <br />are not eligible. The plan year adopted by the City begins on January 1 and ends December 31. <br />To obtain reimbursement of expenses incurred within a plan year within the spending accounts (items 2 <br />or 3), employees must submit claims within 90 days of the end of the plan year or separation of service <br />from the City, whichever occurs first. Funds unclaimed after 90 days of the close of the plan year are <br />then remitted to the City. <br />D. Deferred Compensation Plans <br />City employees may defer a portion of their compensation under four separate, optional City -sponsored <br />deferred compensation plans created in accordance with Internal Revenue Code Section 457. Under <br />these plans, participants are not taxed on the deferred portion of their compensation until distributed to <br />them; distributions may be made only at termination, retirement, death, or in an emergency as defined <br />by the plans. <br />Effective January 1, 1998, the City signed new deferred compensation plan administration agreements <br />with the deferred compensation providers to provide for the administration and management of <br />employees' deferred compensation plan assets. These agreements incorporate changes in the law <br />governing deferred compensation plan assets which now require plan assets to be held for the exclusive <br />benefit of plan participants and their beneficiaries. Since the assets held under these new plans are not <br />the City's property and are not subject to claims by general creditors of the City, they have been <br />excluded from these financial statements. <br />Effective January 28, 2003, the City implemented a retirement enhancement plan (401-A defined <br />contribution plan) for certain executive management employees. In February 2005, a plan amendment <br />was adopted to extend the 401-A plan to all members of the executive management employee <br />classification. Under this plan, the City contributes 2% of the employees' compensation into the 401-A <br />plan. <br />Effective October 1, 2002 for the Redwood City Management Employees Association, the City <br />contributes an amount equal to 2% of the base monthly salary to a deferred compensation plan offered <br />by the City to members of the Association. <br />81 287 <br />