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101511 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 29 30 31 32 33 34 35 36 IESOLUTION NO. 10 ,151 • A RESOLUTION TO PERMIT CITY EMPLOYEES PARTICIPATION IN A SECTION 125 CAFETERIA TAX SAVINGS PLAN TO BE ADMINISTERED BY THE CITY OF LITTLE ROCK, AND APPROVING THE PLAN DOCUMENT. WHEREAS, the City of Little Rock desires to establish a Tax Savings Plan for its employees effective January 1, 1998 for an indefinite period of time; and WHEREAS, the City desires that a plan such as this be administered in -house by City staff; and WHEREAS, this plan is designed to provide participating employees the choice to receive certain benefits under the Tax Savings Plan, and to be able to purchase such benefits through the Plan on a pre -tax basis. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF LITTLE ROCK, ARKANSAS: SECTION 1. City employees are eligible to participate in the Section 125 Cafeteria Tax Savings Plan to take advantage of pre - taxing for medical care expenses, dependent premiums associated with healthcare and dental insurance, and child /dependent care expenses. SECTION 2. This plan is intended to qualify as a "cafeteria plan" within the meaning of Section 125 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder. SECTION 3. The Plan Documents are approved, and the City's Finance Director is hereby authorized to act as "Administrator" of the Plan. WE 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 ADOPTED: Decem7ier 2, 1997 • 631 ATTEST: CITY CLERK APPROVED AS TO FORM: r lllff.,V Y Lei :►a APPROVED: U K MAYOR 939 ARTICLE 1. INTRODUCTION 1.1 Establishment of Plan. The City of Little Rock (the "Employer "), hereby establishes the City of Little Rock Tax Savings Plan (the "Plan ") for its employees effective January 1, 1998 for an indefinite period of time. This Plan is designed to provide a participating employee the choice to receive certain benefits under the Employer's Tax Savings Plan in lieu of receiving a portion of his Compensation in cash. In effect, the employee is able to purchase such benefits through this Plan on a pre -tax basis. 1.2 Leal Status. This Plan is intended to qualify as a "cafeteria Plan" within the meaning of section 125 of the Internal Revenue Code of 1986, as amended (the "Code "), and regulations issued thereunder. ARTICLE II. DEFINITIONS 2.1 Definitions. "Administrator" means the Finance Director for the City of Little Rock "Code" means the Internal Revenue Code of 1986, as amended. "Compensation" means the total Form W -2 compensation for Federal income tax withholding purposes paid by the Employer to an employee for services performed, determined prior to any Salary Reduction election under this Plan, prior to any salary reduction election under any other Code section 125 cafeteria plan, and prior to any elective salary deferral contribution under any Code section 401(a) arrangement. "Dependent" means any individual who qualifies as a dependent under Code Section 152 (as modified by Code Section 105(b)). "Dependent Care Expenses" means the amount paid by a Participant for day -care provided for a Dependent when such expenses are incurred to enable the Participant (and spouse, if applicable) to be gainfully employed. These expenses are subject to the qualification rules and limitation provisions of Internal Revenue Code Sections 21, 129, and 125 and related nondiscrimination provisions. "Effective Date" of this Plan is January 1, 1998. "Election Form" means the form provided by the Administrator for the purpose of allowing Eligible Employees to elect, during an Open Enrollment Period or upon first becoming an Eligible Employee, to participate in this Plan and elect the Tax Savings Plan and Salary Reductions to pay for such benefits, or instead to receive their full salary in cash and pay for their medical care and dependent care expenses with after -tax dollars outside of this Plan. "Eligible Employees" means employees eligible to participate in this Plan as provided in Section 3.1. "Employer" means the City of Little Rock. "Medical Care Expenses" is the amount paid by a Participant for medical care of a type that would be an allowable medical expense deduction for federal income tax purposes, pursuant to Internal revenue Code Section 213, without regard to the non - deductible floor set out there. "Participant" means a person who is an Eligible Employee and who is participating in this Plan in accordance with the provisions of Article 111. Participants include those who elect the Tax Savings Plan Benefits and Salary Reductions to pay for such benefits. "Plan" means the City of Little Rock Tax Savings Plan as set forth herein and as amended from time to time. "Plan Year" means the twelve month period commencing on each January I Pending on December 31 of the same year. "Salary Reduction" means the amount by which a Participant's Compensation is reduced pre -tax and applied by the Employer under this Plan to cover the Participant's reimbursable medical care and dependent care expenses. "Tax Savings Plan" is a benefit option that allows Eligible Employees to elect to establish a Medical Expense Reimbursement Option and/or a Dependent Care Reimbursement Option to provide for reimbursement of qualifying expenses incurred by or on behalf of a Participant or Dependents. 2.2 Gender and Number. Except when otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and the definition of any term herein in the singular shall also include the plural. 2.3 Headings. The headings of the various Articles, Sections, and Subsections are inserted for convenience of reference and are not to be regarded as part of this Plan or as indicating or controlling the meaning or construction of any provision. 2.4 Plan Provision Controlling. In the event the terms or provisions of any summary or description of this Plan, or of any other instrument, are in any construction interpreted as being in conflict with the provisions of this Plan as herein set forth, the provisions of this Plan shall be controlling. 2.5 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, this illegality or invalidity shall not affect the remaining provisions of this Plan, and such remaining provisions shall be fully severable and this Plan shall, to the extent practicable, be construed and enforced as if the illegal or invalid provision had never been inserted therein. 2.6 Code Compliance. It is intended that this Plan meet all applicable requirements of the Code and of all regulations issued thereunder. This Plan shall be construed, operated and administered accordingly, and in the event of any conflict between any part, clause or provision of this Plan and the Code, the provisions of the Code shall be deemed controlling, and any conflicting part, clause or provision of this Plan shall be deemed superseded to the extent of the conflict. ARTICLE III. PARTICIPATION 3.1 Eligibility to Participate. As of January 1, 1998, an employee is eligible to participate in the Tax Savings Plan, if he is a full -time regular employee. 3.2 Election Periods; Effective Dates of Elections. Eligible Employees can elect to participate in this Plan and pay for their medical care and/or dependent care expenses under the Tax Savings Plan with pre -tax Salary Reduction dollars. (a) Election During Open Enrollment Period. During each Open Enrollment Period with respect to a Plan Year, the Administrator shall provide an Election Form to each Eligible Employee. The Election Form shall enable the Eligible Employee to elect to participate in this Plan for the Plan Year so as to pay for his medical care and/or dependent care expenses with pre -tax Salary Reduction dollars. The Election Form shall be due and returnable to the Administrator on or before the last day of the Open Enrollment Period. Elections made during an Open Enrollment Period will become effective on the first day of the applicable Plan Year. (b) Elections by Newly Hired Employees. Newly hired employees who commence employment with the Employer during a Plan Year, and are or will become eligible to participate pursuant to Section 3. 1, shall be provided with an Election Form by the Administrator, containing information and options like that described in Section 3.2(a). The Election Form shall be returnable to the Administrator within 30 days. Elections made by new hires will become effective on the first day of the pay period after the Administrator receives the Election Form. (c) Eligible Employee Who Fails to File an Election Form. If an Eligible Employee fails to file (or fails to timely file) an Election Form with respect to a Plan Year, he may not elect the Tax Savings Plan until the next Open Enrollment Period. 3.3 Termination of Participation. A Participant will cease to be a Participant in this Plan upon the earlier of a. the termination of this Plan; b. the date on which he ceases (because of termination of employment, layoff, reduction in hours, or any other reason) to be an employee eligible to participate under Section 3.1; or c. the date the P'dfficipant revokes his election to participate on fount of and consistent with a chang�eiinn family status. 3.4 Participation Following Termination. After termination of participation under Section 3.3, an employee's subsequent participation in this Plan shall occur at the time and in the manner set forth in Section 3.1 as if such employee were a new employee of the Employer. However, if an employee again becomes eligible to participate in this Plan during the same Plan Year in which his participation ceased, he may not resume participation prior to the first day of the following Plan Year. 3.5 Special Rule Involving Certain Family Status Changes. Notwithstanding Sections 3.3 and 3.4, a Participant's participation will not terminate, and the Participant may suspend and then restore his Salary reductions in the same Plan Year if the Participant meets the following three conditions: a. the Participant has taken an unpaid leave of absence from the Employer; b. the Participant elects under Section 4.4(a) to reduce his Salary Reduction to $0; and c. upon return to employment after a leave of absence, the Participant re- elects under Section 4.4(a) to increase his Salary Reduction to the level that existed immediately before it was reduced to $0 (or to some greater or lesser level if on account of and consistent with a different change in family status). If COBRA applies, the Participant, while on unpaid leave or following employment termination, will be given the opportunity to continue his Medical Care Expense Reimbursement account under COBRA, and to pay for the contribution with after -tax dollars outside the Plan. 3.6 Contributions. (l) Salary Reductions. An Eligible Employee may elect in writing, on a form provided by and filed with the Plan Administrator, as specified in Article 111, to participate in the Tax Savings Plan options under the Plan. Such election results in a reduction of his or her Compensation for such Plan Year to allow the Company to contribute the amount of such salary reduction for Tax Savings Plan options under the Plan. (2) Maximum Contributions. The maximum amount of Company contributions as elected under the Plan for any Participant in any Plan Year is the sum of: (a) the maximum amount the Participant may elect and receive under the Dependent Care Expense Reimbursement Option; and (b) the maximum amount the Participant may elect and receive under the Medical Expense Reimbursement Option. The Company reserves the right to limit contributions on behalf of any Participant if necessary to meet the nondiscrimination requirements of the law (including but not limited to Sections 125 and 129 of the Internal Revenue Code) in order to preserve the Plan's status under Internal Revenue Code Section 125 and related provisions. ARTICLE IV. BENEFITS AND ELECTIONS Medical Care Reimbursement Option 4.1 Purpose. The purpose of this benefit is to provide for reimbursement of Medical Care Expenses incurred by Participants or Dependents. This section describes the Medical Reimbursement Option under the Plan. 4.2 Benefit Amount. Subject to the provisions of the Plan, each Plan Year each Eligible Employee may elect, as described in Article 111, to be reimbursed by the Company for Medical Care Expenses incurred during that Plan Year to the extent that such expenses do not exceed the lesser of a. the total Medical care Expenses incurred by the Participant for medical expenses during that Plan Year, or b. the amount which the Participant allocated to this benefit option for the Plan Year. The amount of Salary Reduction allocation, if any, shall not be less than $120 per Plan Year and shall not be more than $5000 per Plan Year. 4.3 Nonduplication of Benefits. A Participant will not be reimbursed under this Plan to the extent that such expenses are paid to or for the benefit of the Participant, or a Participant's Dependent, or reimbursed, under the provisions of any other plan. M M M = M `635 4.4 Reimbursement Procedu0 The Company will reimburse each Particip0for the expenses payable under this benefit option as described in Article V upon receipt of acceptable evidence that: a. such Medical Care Expenses have been incurred by the Participant; and b. such reimbursed expenses will not be used for the purpose of tax credits or tax deductions on the Participant's federal or state income tax return. Dependent Care Expense Reimbursement Option 4.5 Purpose. The purpose of this benefit is to provide for the reimbursement of Dependent Care Expenses to Participants. This section describes the Dependent Care Expense Reimbursement option under the Plan. 4.6 Benefit Amount. Subject to the provisions of the Plan, each Plan Year each Eligible Employee may elect, as described in Article 111, to be reimbursed by the Company for Dependent Care Expenses incurred during that Plan Year to the extent that such expenses in the aggregate do not exceed the lesser of a. the total Dependent Care Expenses paid by the Participant for qualifying Dependent Care Expenses incurred during that Plan Year; or b. the amount allocated by the Participant to this benefit option. The amount of such allocation, if any, shall not be less than $120 per Plan Year and shall not be more than $5000 per Plan Year. 4.7 Nonduplication of Benefits. A Participant will not be reimbursed under this Plan to the extent that such expenses are paid to or for the benefit of the Participant, or a Participant's Dependent, or reimbursed under the provisions of any other plan. 4.8 Reimbursement Procedures. The Company will reimburse each participant for the expenses payable under this benefit option as described in Article V upon receipt of acceptable evidence that: a. such Dependent Care Expenses have been paid by the Participant; and b. such reimbursed expenses will not be used for the purpose of tax credits or tax deductions on the Participant's federal or state income tax return. 4.9 Irrevocability of Election. Except as provided in this Section 4.9, a Participant's election under this Plan is irrevocable for the duration of the Plan Year to which it relates. a. Changes in Family Status. A Participant may revoke his benefit election during a Plan Year and make a new election for the remaining portion of the Plan Year effective as of the first day of the pay period following the new election, if the revocation and new election are both on account of and consistent with a change in family status. A Participant who wishes to change his election as a result of a change in family status must request to change his election within 30 days of the family status event. Examples of a change in family status include: (l) marriage or divorce of the Participant (2) the death of the Participant's spouse or a dependent (3) the birth or adoption of a child of the Participant (4) the termination of employment (or commencement of employment) of the Participant's spouse; or (5) the taking of unpaid leave of absence by the Participant or his spouse ARTICLE V. CLAIMS PROCEDURES 5.1 Filing of Claims. Claims for reimbursements incurred during the Plan Year, and not otherwise covered under any other plan, may be requested at any time during the Plan Year and until 90 days after the Plan Year ends. In the event a Participant terminates participation during the Plan Year, all claims for expenses incurred prior to termination must be submitted within 90 days. 5.2 Payment of Claims. Claims for reimbursement under the Tax Savings Plan will be paid as soon as possible in such amounts, at such times and to such persons as shall be determined in accordance with the Plan. The form and manner of payment will comply with the terms and conditions of the Plan. Claims will be processed on a weekly basis. Drafts shall be for a minimum of $20, except to close out a Participant's option for any Plan Year. 636 5.3 Claims in Excess of Accullfulated Emolovee Salary Reductions. a. With respect to the Medical Expense Reimbursement Option: the Plan Administrator will reimburse the Participant at any time during the Plan Year for the qualified expenses, up to the maximum amount of salary reduction allocated to the Plan for the entire Plan Year, even if all annual allocations have not yet been made by the Participant. b. With respect to Dependent Care Expense Reimbursement Option: the Plan Administrator will reimburse the Participant for qualified expenses, so long as those expenses do not exceed the Participant's year-to- date contributions, less any amounts previously paid to a Participant for reimbursements. If claims are submitted in excess of this amount, they will be reimbursed to the employee as additional year-to -date contributions are accumulated under the Dependent Care Expense Reimbursement Option. A subsequent claim form will not be required. 5.4 Maximum Payments and Forfeitures. In no event will the total payments under any Plan option exceed the total annual contributions to such option in any Plan Year. Any unused contributions that are not used to provide reimbursement of expenses incurred during such Plan Year and submitted within 90 days after the close of the Plan Year will be forfeited by the Participant. ARTICLE Vl. ADMINISTRATION 6.1 Plan Administrator. The administration of this Plan shall be under the supervision of the Administrator. It is the principal duty of the Administrator to see that this Plan is carried out, in accordance with its terms, for the exclusive benefit of persons entitled to participate in this Plan without discrimination among them. 6.2 Powers of the Administrator. The Administrator shall have such duties and powers as it considers necessary or appropriate to discharge its duties hereunder, including, but not limited to, the following discretionary authority: a. To construe and interpret this Plan and to decide all questions of eligibility and participation; b. To prescribe procedures to be followed and the forms to be used by employees and Participants to make Salary Reductions and benefit elections pursuant to this Plan; c. To prepare and distribute information explaining this Plan and the benefits under this Plan in such manner as the Administrator determines to be appropriate; d. To request and receive from all employees and Participants such information as the Administrator shall from time to time determine to be necessary for the proper administration of this Plan; e. To prepare and keep on file such reports and information concerning the benefits covered by this Plan as it determines from time to time to be necessary and proper; f To appoint and employ such individuals or entities to assist in the administration of this Plan as it determines to be necessary or advisable, including legal counsel and benefit consultants; g. To sign documents for the purposes of administering this Plan, or to designate an individual or individuals to sign documents for the purposes of administering this Plan; and It. To maintain the books of accounts, records, and other data in the manner necessary for proper administration of this Plan and to meet any applicable disclosure and reporting requirements. 6.3 Establishment of Tax Savings Plan Options. The Plan Administrator will establish and maintain a Medical Expense Reimbursement Option for each Plan Year for each Participant who elects that benefit option. The Plan Administrator will establish and maintain a Dependent Care Expense Reimbursement Option for each Plan Year for each Participant who elects that benefit option. No interest will be credited on monies allocated to the Tax Savings Plan Accounts. 6.4 Allocation of Contributions. Following any payday on which contributions for a Participant are made, the Plan Administrator will apply such contributions consistent with the options elected by each Participant. 6.5 Benefits Available. Records will be kept under the Plan to determine the remaining benefits available to each Participant. 6.6 Insufficient Compensation. If a Participant does not receive sufficient Compensation to meet the Tax Savings Plan contributions elected under the Plan, the Plan Administrator is authorized to take the following action: Available compensation will first be allocated to the Participant's Medical Expense Reimbursement Option, then to the Participant's Dependent Care Expense Reimbursement Option. Any insufficient amounts will be deducted in the next pay period(s).