HomeMy WebLinkAboutRESO 6719e RESOLUTION NO. 6719 e. ORIGINAL
ReSOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO ADOPTING A FLEXIBLE BENEFITS ~LAN WHICH
PLAN WILL BE eFFECTIVE o~ JULY 30, 1980
WHEREAS, the City Council wishes to establish a plan
to provide eligible employees of the city with the opportunity to
pay for dependent care assistance and such other Statutory Non-
Taxable Benefits as the Council may from time to time approve.
WHEREAS, this plan is intended to qualify as a Cafeteria
Plan unde:-Section l 2j of the Internal Revenue Code of 1986 as
amended and is to be interpreted in a manner consistent there-
with.
NOW, THEREFORE, the Council of the City of Palo Alto
does RESOLVE as follows:
SECTION 1. That the Council hereby adopt that certain
plan entitled •city of Palo Alto Flexibl?. Benefits Plan effective
July 30, 1988• and attached hereto and incorporated herein as
Exhibit "A".
SECTION 2. The Council finds that this is not a project
under the Califor~ia Environmental Ouality Act and, therefore, no
environmental impact assessment is necessary.
INTRODUCED ANO PASSED: July 18. 1988
A¥ES: Bechtel. Cobb. Fletcher, Klein. Levy, Renze!. Sutorius. Woolley
NOES: None
ABSTENTIONS: None
ABSENT: Patitucci
ATTEST: APPROVED: J.~ ~ .
~ ~.-1'1 L
City
ARTICLE 1
ARTICLE 2
ARTICLE 3
_\RT I CLE 4
ARTICLE 5
ARTICLE 6
ARTICLE 7
ARTICLE 8
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TABLE OF CONTENTS
Definitions......................... 1
Eligibility and Participation .... ,.. 3
Benefit Elections.................. 6
Participant AccoWlts and
Benefit Accounts................. 9
Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . lO
Amendment or Termination of Plan... 11
Administration..................... 12
General Provisions................. 13
1.3 "Benefit Election Form" means the form det'9rmined
by the Administrator by which an eligible Employee elects
benefits under the Plan and authorizes salary reductions in
accordance with Article 3.
1.4 "City" means the City of Palo Alto.
1.5 "City Council" means the governing legislative body
of the City, as constituted from time to time.
1.6 "Code" means the Internal Revenue Code of 1986, as
amended (and including regulations issued thereunder).
1.7 "Dependent care Assistance Plan" means the City of
Palo Alto Dependent Care Assistance Plan, as amended from
time to time, the terms of which shall be incorporated into
the Plan by reference.
1.8 "Effective Date" means July 30, 1988.
1.9 "Employee" means a person who receives remuneration
for rendering senrices to the City, any portion of whose
remuneration js subject to withholding of income tax andior
employment tax by the City, as well as any other person
qualifying as a common law employee of City.
1.10 "Life Event" means, and is limited to:
(a) a change in Participant's family status;
including but not limited to marriage, divorce, death of a
spouse or child, birth or adoption of a child, and any other
permissible events as may be set forth in regulations
promulgated by the Internal Revenue Service, or
{b) termination of employment for the
Participant's spouse.
2.
CITY OF PALO ALTO
FLEXIBLE BENEFITS PLAN
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This Plan is to be known as the City of Palo Alto
Flexible Benefits Plan. It is effective as of July 30,
1988. The Plan is established by the City of Palo Alto {the
"City"), to provide eligible employees of the City with the
opportunity to pay for dependent care assistance and such
other Statutory Non-Taxable Benefits (as hereinafter defined)
as may from time to time be offered wider the Plan with
pre-tax dollars, and/or to receive cash. The Plan is
intended to qualify as a cafeteria plan under section 125 of
the Internal Revenue Code of 1986, as amended {the "Code"},
and is to be interpreted in a manner consistent with
section 125 of the Code.
ARTICLE 1
l)EFINITIONS
The following words and phrases as used herein shall
l1ave the following meanings, wiless a different meaning is
plainly required by the context:
1.1 "Administrator" means the City Manager or his
designee.
1. 2 "Benefit" means any Statutory Non-Taxable Benefit
offered under this Plan and cash.
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1.11 "Participant" means an Eligible Employee (as
defined in Section 2.1) who becomes a Participant pursuant to
the terms of Article 2.
1.12 "Plan" means the City of Palo Alto Flexible
Benefits Plan as herein set forth and as it may hereafter be
amended from time to time.
1.13 "Plan Year" means the 12-consecutive-month period
ending with the last pay period of the calendar year.
Notwithstanding the foregoing, the Plan's initial "Plan Year"
shall commence on July 30, 1988, and end on December 16, 1988.
1.14 "Statutory Non-Taxable Benefits" means those
benefits available for election by a Participant as described
in Section 5.2, as it may be amended from time to time.
Masculine pronouns oL adjectives include the feminine as
well as the masculine gender and the singular includes the
plural, unless the context clearly indicates otherwise.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Eligible Employees. Each Employee who is eligible
to participate in any Plan maintained by the City which
provides Statutory Non-Taxable Benefits and whose
participation is provided for in an applicable Memorandum of
Understanding or Compensation Plan shall be an "Eligible
Employee" eligible to participate in the Plan on the terms
specified below.
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3.
2.2 Par~ic~ation Date. Each Eligible Employee shall,
subject to the requirements of Article 3, become a
Participant on the later of:
(a) the Effective Date; or
(b) the date on which he or she first becomes
eligible for any of the Statutory Non-Taxable Benefits which
may be elected under the Plan provided he or she signs a
salary reduction agreement in accordance with Article 3.
2.3 Termination of Participation. A Participant's
participation in the Plan shall terminate at the time (a) the
Participant ceases to be an Eligible Employee and has $0
credited to his Accou...1ts in the Plan, (b) the Participant
does not elect any of the Statutory Non-Taxable Benefits
described in Section 5.2, or (c) the Plan is terminated,
whichever first occurs.
Subject to any specific limitations which the City shall
impose on the purchase of any Statutory Non-Taxable Benefit
under the Plan, (a) participation shall be continued during a
leave of absence during which the Participant continues to
receive compensation from the City and (b) participation
shall be suspended during an unpaid leave of absence.
2.4 Reinstatement of Participation.
(a) A former ~articipant who once again becomes an
Eligible Employee after a termination of employment with the
City shall become a Participant after meeting the
requirements of the Plan.
4.
(b) A former Participant ~ho once again become~ an
Eligible Employee after an unpaid leave of absence of 30 days
or less shall resume participation upon return to work,
provided such return is within the same Plan Year. The
withholding for such a Participant shall be the same amount
after Participant resumes participation as it was prior to
the unpaid leave of absence, with no adjustment for the time
during the unpaid leave of absence when no withholding
occurred. Every other Participant who is on an unpaid leave
of absence resumes participation as soon as administratively
feasible after completing, signing and filing a Benefit
Election Form with the Adrninist~ator, and such Benefit
Election Form shall be effective, subject to Section 3.4, for
the period beginning on the date determined by the
Administrator and ending on the last day of the Plan Yea.r
during which such form was filed.
If a suspended Participant resumes participation after
an unpaid leave of absence in the same Plan Year as the
unpaid leave of absence began, the Benefits elected for the
remainder of such Plan Year shall be identical to those
Benefits, if any, elected at the beginning of such Plan Year,
except as otherwise permitted by Section 3.4.
(c) A farmer Participant who at all times remains
an Eligibie Employee may re-enroll in the Plan in accordance
with the provisions of Article 3.
5.
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ARTICLE 3
BENEFIT ELECTIONS
3.1 Election of Benefits. A Participant shall complete
a Benefit Election Form in accordance with the provisions of
this Article 3 in order to elect any of the Statutory
Non-Taxable Benefits described under Article 5 or any
permissible combination thereof. This Benefit Election Form
shall specify the specific amounts to be used for providing
each elected Statutory Non-Taxable Benefit and a salary
reduction agreement.
3.2 Benefit Election Form; Initial Enrollment Period.
(a) Each person who is or will be an Eligible
Employee on or before the Effective Date who wishes to become
a Participant on the Effective Date must complete, sign and
file an initial Benefit Election Form with the Administrator
on or before the Effe~tive Date. The elections made by the
Participant on this initial Benefit Election Form shall be
effective, subject to Section 3.4, for the Plan Year
beginning on the Effective Date. and ending on December 16,
1988.
(b) An Employee who first becomes an Eligible
Employee after the Effective Date, may enroll by completing,
signing and filing an initial Benefit Election Form with the
Administrator prior to the first day of the pay period
following the first day of the month after the Employee's
6. (, , •J" 8 a
date of hire by the City {the "Enrollment Date"). The
elections made by the Participant on this initial Benefit
Election Form shall be effective, subject to Section 3.4, for
the period beginning on the ~'nrollment Date and ending on the
last day of the Plan Year within which such participation
began.
{c) An Eligible Employee who does not file a
Benefit Election Form with the Administrator in a timely
fashion upon first becoming eligible for the Plan may become
a Participant in the future in accordance with the terms of
Section J.3.
J.3 Benefit Election Form; Annual Enrollment Period.
Each Participant shall (and an Eligible Employee who is not a
Participant may, in order to become a Participant) complete,
sign and file a Benefit Election Form on or prior to the
first day of any Plan Year and such elections shall be
effective, subject to Section 3.4. for such Plan Year. A
Participant who fails to complete, sign and file a Benefit
Election Form as required by this Section 3.3 shall be deemed
to have discontinued participation in the Plan.
3.4 Benefit Election Form; Changes of Election. A
Participant ~ay change his or her election of Benefits and
any Eligible Employee who is not a Participant may enroll in
the Plan within a reasonable time after ~he occurrence of a
7.
Life Event. Changes or enrollments made pursuant to this
Section 3.4 shall be effective for the remainder of the Plan
Year in which the change is made beginning on the date
established by the Administrator in a non-discriminatory
fashion. Except as expressly provided in the Plan, a
Participant may neither elect to receive Statutory
Non-Taxable Benefits nor change his or her election of such
benefits during a Plan Year.
3.5 Salary Reduction Agreement. A Participant may
choose wider the Plan to receive such Participant's
compensation from the Company for any Plan Year in cash or to
have a portion of such compensation applied by the Company
toward the cost of one or more Statutory Non-Taxable
Benefits. Any Participant who elects to receive one or more
Statutory Non-Taxable Benefits shall enter into a salary
reduction agreement authorizing the reduction of such
Participant's compensation by the amourts payable for the
Statutory Non-Taxable Benefits elected.
3.6 Discrimination Limitation. Any provisions of the
Plan to the contrary notwithstanding, no more than
twenty-five percent (25%) of the aggregate amounts withheld
hereunder during any Plan Year in order to provide Statutory
Non-Taxable Benefits shall be provided to the class of
individuals who are "Key Employees" (within the meaning of
Section 416(i)(l) of the Code).
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ARTICLE 4
PARTICIPANT ACCOUNTS_ AND_ BENEFIT ACCOUNTS
4.1 Participant and Benefit Acco:µnts. The
Administrator shall maintain a Participant Account for each
Participant who elects to receive a Statutory Non-Taxable
Benefit. Each Participant Account shall be divided into the
appropriate number of subaccounts (hereinafter individually
teferred to as a "Benefit Account"). Subject to Section 4.7,
a Benefit Account shall be established for a Participant for
each Statutory Non-Taxable Benefit elected by such
Participant.
4.2 Crediti.!!.S_Accounts. As of the end of each pay
period during each Plan Year, the Participa .. .i.t A..:count of each
Participant on such date shall be credited with contributions
from the Company based on the Statutory Non-Taxable Benefits
elected by the Participant. The Participant's compensation
shall be reduced by an equivalent amount.
4.3 Allocation of Credits. Amounts credited to a
Participant Account shall be allocated, on the date credited,
to the Benefit Accounts of the Participant pursuant to the
elections made by the Participant in accordance with
Article 3.
4.4 Debiting Accounts. All payments of Statutory
Non-Taxable Benefits under the Plan shall be debited against
the appropriate Benefit Account of the Participant in
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accordance with the terms of the Dependent Care Assistance
Plan or any other plan offering Statutory Non-Taxable
Benefits.
4.5 Forfeiture of Unused Benefits. Any amount
allocated to a Participant's Account shall be forfeited by
the Participant and retained by the City if it has not been
applied to provide the elected Statutory Non-Taxable Benefits
in accordance with the terms of the Dependent Care Assistance
Plan or such other Statutory Non-Taxable Benefit Plan as may
be applicable.
4.6 No Funding of Accounts. Participant AccoWlts shall
be established for bookkeeping purposes only. No money shall
actually be paid into any Participant Account and no interest
will be credited to or paid on amounts credited to any
Participant Account. No money shall be paid to, held in or
invested in any separate trust.
ARTICLE 5
BENEFITS
s.1 Benefits. Benefits to be offered through the Plan
shall be selected at the discretion of the Administrator and
may be prospectively changed at any time after the
Participants are notified in writing.
5.2 Statut~ry Non-Taxable Benefits. The Statutory
Non-Taxable Benefits offered on the Effective Date shall
consist of the following benefits:
10.
(a) dependent care assistance.
The amounts payable under the Plan fer these benefits
shall be as set forth in the City of Palo Alto Dependent Care
Assistance Plan.
5.3 O~her Benefits. The only benefit available other
than a Statutory Non-Taxable Benefit shall be cash.
5.4 Scope of the Plan. Benefit payments to or on
behalf of a Participant will be provided wider the terms of
the Dependent Care Assistance Plan and such other St~tutory
~on-Taxable Benefit Plans as may be included hereunder from
time to time (the ''Benefit Plans"). The types and amoWlts of
benefit payments &vailable under the Benefit Plans. the
requirements for participating in such Benefit Plans. and the
other terms and conditions of coverage and benefit payments
under such Benefit Plans are as set forth from time to time
in the documents that constitute (or are incorporated by
reference in) such Benefit Plans. The Benefit Plans shall be
incorporated by reference into the Plan.
ARTICLE 6
AMENDMENT OR TERMINATION OF PLAN
6.1 Right to -~end. The City reserves the power at any
time, and from time to time, to modify or amend in whole or
in part any or all of the provisions of the Plan.
11.
6.2 Right to Terminate; E~!ect of Termin~tion. The
City reserves the power to discontinue or terminate the Plan
at any time. Any such discontinuance or termination shall be
effective as of such date as the City shall determine.
ARTICLE 7
ADMINISTRATION
7.1 Plan Administrator. The administration of the Plan
shall be under the supervision of the Administrator. It
shall be a principal duty of the Administrator to see that
the Plan i.s carried out, in accordance with its terms, for
the exclusive benefit of persons entitled to participate in
the Plan without discrimination among them. The
Administrator will have full power to administer the Plan in
all of its details, subject to applicable requirements of
law. For this purpose, the Administrator's powers will
include, but will not be limited to, the following authority,
in addition to all other powers provided by the Plan:
(a) To make and enforce such rules and regulations
as it deems necessary or proper for the efficient
administration of the Plan;
(b) To interpret the Plan, its interpretation
thereof in good faith to be final and conclusive on all
persons claiming benefits under the Plan;
(c) To decide all questions concerning the Plan
and the eligibility of any person to participate in the Plan;
12.
. . '.
(d) To appoint such agents, counsel, accountants,
consultants and other persons as may be required to assist in
administering the Plan; and
(e) To allocate and delegate its responsibilities
under the Plan and to designate other persons to carry out
any of its responsibilities under the Plan, any such
allocation, delegation or designation to be in accordance
with applicable requirements of law.
7.2 Examination of Records. The Administrator will
make available to each Participant such of its records under
the Plan as pertain to that Participant, for examination at
reasonable times by such Participant or that Participant's
legal representative during normal business hours.
7.3 Reliance on Tables, Etc. In administering the
Plan, the Administrator will be entitled to the extent
permitted by law to rely conclusively on all tables,
valuations, certificates, opinions and reports which are
furnished by accoWltants, counsel or other experts employed
or engaged by the Administrator.
ARTICLE 8
GENERAL PROVISIONS
8.1 No Empl~ent Rights. In no event will the terms
of employment or services of any Participant be modified or
in any way affected hereby. Nothing herein contained shall
13.
be deemed to give any Employee the right to be retained in
the employ of the City or to interfere with the right of the
City to discharge any Employee at aLy time.
8.2 Governing_La~. The provisions of the Plan shall be
construed, administered and enforced according to applicable
federal law and the laws of the State of California.
8.3 Anti-Alienation. No Statutory Non-Taxable Benefit
shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to
do so shall be void. No such benefit shall be subject to be
taken by the creditors of a Participant by any process
whatsoever, and any attempt to cause such benefit to be so
subjected will not be recognized.
8.4 Source of Benefits. Nothing herein will be
construed to require the City or the Administrator to
maintain any fund or segregate any amount for the benefit of
any Participant. No Participant shall have any right to, or
interest in, any assets of the City upon termination of
employment o~ otherwise, except with respect to the benefits
payable to such Participant through the Benefit Plans
pursuant to the terms thereof.
8.5 Construction of Plan. Headings of Articles or
Sections of the Plan have been supplied for convenience only
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and are not to be construed as limiting or supplementing the
meanings of any of the provisions of the Plan.
IN WITNESS WHEREOF, the City has caused the Plan to be
executed in its name and on its behalf by a duly authorized
official this --· day of , 1988.
CI'l'Y OF PALO ALTO
of City
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0 10688
CITY OF PALO ALTO
FLEXIBLE BENEFITS PLAN
Effective July 30, 1988