HomeMy WebLinkAboutRESO 6720~r:SOLU'rtON NO. 6 7 20
RESOLUTION OF THE COUNCIL OF TP.E CITY OF PALO
ALTO ADOPTING A DEPENDENT CARE ASSISTANCE PL~_N
WHICH PLAN WILL BE EFFECTIVE ON JULY 30, 1988
WHEREAS, the City Council wishes to establish a plan
which qualifies as a dependent care assistance program under
Section 129 of the Internal Revenue Code of 1986, as amended.
WHEREAS, the purpose of the plan is to enable partici-
pants to elect to receive payments or reimbursements of his or her
dependent care expenses in a manner which allows these expenses to
be excludable from such participant's gross income under Internal
Revenue Code Section 129.
NOW, TH8REFORE, the Council of the City of Palo Alto
do~s RESOLVE as follows:
SECTION 1. That the Council hereby adopt that certain
plan entitled •city of Palo Alto Dependent Care Assistance 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 California Environmental Quality Act and, therefore, no
environmental impact assessment is necessary.
INTRODUCED AND PASSED: July 18, 1988
AYES: Bechtel, Cobb, Fletcher, Klein, Levy, Renzel, Sutorius, Woolley
NOES: None
ABSTENTIONS: NOne
ABSENT: Patitucci
APPROVED AS TO F ~ :
~e-Y~(j
APPRO D:
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CITY OF PALO ALTO
DEPENDENT CARE ASSISTANCE PLAN
Effective July 30, 1988
ARTICLE
I.
II.
III.
CITY OF PALO ALTO
DEPENDENT CARE ASSISTANCE PLAN
TABLE OF CONTENTS
INTRODUCTION •••.••....•..•....•..•••....••••
DEFINITION'S~ •.•.•................•...•.••...
2.1
2.2
2.3
:.?. 4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
11.Adm.inistrator 1
' •••••••••••••• c •••••••••
's Ci ty'1
................................. .
"city Cowie i 1 " . . . . . . . . • . · · · • · · · · · · · · · · · ''Code'' .......................... · •.•••. ·
1·-nependent" ..........................•.
"Dependent Care Assistance Account" •.•.
"Dependent Care Expenses" ..........•...
"Dependent Care Sendce Provider" ..... .
"Effective Date" ...................... .
.,.~..., ee" .......... .t"£ oy ............................... .
"Flexible Benefits Plan" .....•.........
'•Partici'pallt" ............................ ..
''Plan" .................................. .
.. Plan Year• ............................. .
P.AR.TICIP.i.!rION' ................................ ~ •
3.1
3.2
Eligibility ........................ I ....... ..
cessation of Participation ........•....
IV. ELECTION TO RECEIVE DEPENDENT CARE
PAGE
1
l
l
1
1
2
2
2
2
3
3
3
3
3
3
3
4
4
.ASS IST.AN'CE ••••••• ~ • • • • • • • • • • • • • • .. • • • • • • • • • • 4
v.
VI.
4.1
4.2
Maximum.~pendent Care Assistance ..... .
Lower Lim.1 ts ........................... ...
REIMBURSEMENT OR PAYMENT OF DEPENDENT
CARE EX:PEl!ifSES • • • • . • • • • .. • • • • • • • • • • • .. • • • • • ,. • • •
5.1 Claims for Reimbursement or
5.2
5.3
Pa:yment II ••••••••••••• ' ••••••••••• "' •• a ...
Reimbursement or Payment of Expenses .. .
Annual Report to Participants ......... .
TERMINATION OF PARTICIPATION ............... .
4
5
6
6
6
8
8
VII.
VIII.
.ADMINIST:RA.TION .......... of •••• I • I ....... ~ •••••••
7.1
7.2
Plan Administrator ......... , .......... .
Examination of Records ................ .
8
8
9
AMENDMENT OR TERMINATION OF PLAN ........... 10
8.1 Amendment of Plan ............ ,, ....... 10
8.2 Termination of Plan ................... 10
IX. MISCELLMlEOUS ....... , . . . . . . . . . . . . . . . . . .. . . . . . 10
6J60S.
910~··
9.1 Limitation of Rights ................... 10
9.2 Benefit& Solely from General Assets .... 11
9.3 Nonassignability of Rights ............. 11
9.4 No Guarantee of Tax Consequences ....... 11
9.5 Indemnification of City by
Participants. . . . . . . . . . . . . . . . . . . . . . . . . 12
9. 6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 12
CITY OF PALO ALTO
DEPENDENT 9ARE ASSISTANCE PLAN
ARTICLE I -Introduction.
The Plan is intended to qualify as a dependent care
assistance proqre.m under section 129 of the Internal Revenue
Code of 1986, as amended (the "Code"), and ls to be
interpreted in a manner consistent with the requirements of
section 129 of the Code. The purpose of the Plan is to
enable a Participant to elect to receive payments or
reimbursements of his or her dependent care expenses that are
excludable from such Participant's gross income under
section 129 of the Code.
ARTICLE II ~-Definitions.
Wherever used herein, the following terms have the
following meanings unless a different meaning is clearly
required by the context:
2.1 "Administrator" means the City Manager or his
desiqnee.
2. 2 "City" mea.."ls the City of Pa lo Al to.
2.3 "Ci'";y Council" means the governing legislative body
of the City, as constituted from time to time.
2.4 "Code" means the Internal Revenue Code of 1986, as
amended from time to time (and including regulations is~ued
thereW1der). Reference to any section or subsection of the
Code includes reference to any comparable or succeeding
provisions of any legislation which amends, supplements or
replaces such section or subsection.
2.5 "Dependent" means any individual who is (a) a
dependent (as defined in section 152 of the Code) of the
Participant who is under the age of 15 and with respect to
whom the Participant is entitled to an exemption under
section 15l(r.\ of the Code, or (b) a dependent {as defined in
section 152 of the Code) or spouse of the Participant who is
physically or mentally incapable of caring for himself or
herself.
2. 6 "Dependent Care Assistr-..nce Acc-.ou.i."lt" means the
account described in Article v heL~~r.
2.1 "Dependent Care Expenses" means expenses incurred
by a Participant which (a) are incurred for the care of a
Dependent of the Participant or for related household
services, (b) are paid or payable to a Dependent Care Service
Provi~er, and (c) are incurred to enable the Participant to
be qainfully employed for any period for which there are one
or more Dependents with respect to the Participant
"Dependent Care Expenses" shall not include expenses incurred
for servjces outside the Participant's household for the care
of a Dependent unless such Dependent is described in
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section 2.5(&) or regularly spends at least eight hours each
day iu the Participant's household. Dependent Care Expenses
shall be deemed to be incurred at the time the services to
which the expenses relate are rendered.
2.8 "Dependent Care Service Provider" means a person
who provides care or other services described in Section 2.6
above, but shall not include either (a) a dependent care
center (as defined in section 2l(b)(2)(D) of the Code) unless
the requirements of section 2l(b)(2)(C) of the Code are
satisfied, or (b) a related individual described in
section 129(c) of the Code.
2.9 "Effective Date" means July 30, 1988.
2.10 "Fmployee" means a person who receives remuneration
for rendering services to the City, any portion of whose
remuneration is subject to withholding of income tax and/or
employment tax by the City, as well as any other person
qualifying as a common law employee of the City.
2.11 "Flexible Benefits Plan" means the City of Palo
Alto Flexible Benefits Plan. as amended from time to time.
2.12 "Participant" means each F..mployee who participates
in the Plan in accordance with Article III.
2.13 "Plan" means the City of Palo Alto Dependent Care
Assistan~e Plan as set forth herein, together with any and
all amendments and supplements hereto.
2.14 "Plan Year" means the 12-consecutive-month period
ending with the last pay period of the calendar year.
3.
Notwithstanding the foreqoing, the Plan's initial "Plan Year"
shall commence on July 30, 1988, and end on December 16, 1988.
A pronoun or adjective in the masculine gender includes
the feminine gender and the singular includes the plural,
unless the context clearly indicates otherwise.
ARTICLE III -Participation.
3.1 Eligibility. Each Employee whose participation is
provided for in an applicable Memorandum of Understanding or
Compensation Plan shall be eligible to participate in the
Plan. Participation in the Plan shall cotmnence on the
effective date of the Eligible Employee's election of
dependent care assistance under the Flexible Benefits Plan.
3.2 cessation of Parti9ipation. A Participant will
cease to be a Participant as of the end of the Plan Year in
which occurs the earliest of (a) the date on which the Plan
terminates or (b) tLe date on which his or her election to
receive dependent care assistance expires or is terminated
under the Flexible Benefits Plan and all amounts credited to
the Participant's Dependent Care Assistance Account have been
used or for!eited.
ARTICLE IV -Election to Receive Dependent Care Assistance.
4.1 Maximum Dependent Care Assistance. The maximum
amount which the Participant may receive in any Plan Year in
4..
the form of the reimbursement or payment of Dependent Care
Expenses under the Plan which is excludable from the
Participant's gross income under section 129 of the Code
shall be the lesser of (a) the amount of dependent care
reimbursement elected under the Flexible Benefits Plan;
(b) the Participant's earned income '.as defined in section
129(e)(2) of the Code) for the Plan Year, (c) the earned
income of the Participant's spouse for the Plan Year, or
(d) $5,000 ($2,500 in the case of a married Participant
filing a separate federal income tax return for such Plan
Year). In the cci.~e of a spouse who either is a full-time
student at an educa~ional institution or is physically or
mentally incapable of caring fo~ himself or herself, such
spouse shall be deemed to have earned income of not less than
$200 per month if the Participant has one Dependent and $400
per month if the Participant has two or more Dependents.
4.2 Lower Limits. Notwithstanding the foregoing, the
City may establish a lower maximum amount for one or more
Participants (which need not be the same amount for each such
Participant) in order to permit the Plan to qualify as a
dependent care assistance program under section 129(d) of the
Code.
5.
ARTICLE V -Reimbursement or Payment of Dependent Care
EA::penses.
5 .1 Claims fc>r Reimbursement or PaY!!!ent. A Participant
for a Plan Year may apply to the City for reimbursement or
payment of Dependent care Expenses incurred by the
Participant during such Plan Year by submitting an
application in writing to the City, in such form as the City
may prescribe, setting forth:
(a) the amount, date and nature of the expense
with respect to which a benefit is requested;
(b) the name of the person, organization or entity
to which the expense was or is ~o be paid; and
(c) such other information as the City may from
time to time require.
Such application shall be accompanied by bills, invoices,
receipts, cancelled checks or other statements showing the
amounts of such expenses, together with any additional
documentation which the City may request.
5.2 Reimbursement or Payment of Expense~.
(a) The City shall reimburse the Participant for
Dependent Care Expenses incurred during the Plan Year for
which the Participant sul:mits documentation in accordance
with Section 5.1. (The City may, at its option. pay any such
Dependent Care Expenses directly to the Dependent Care
Service Provider in lieu of reimbursing the Participant.) No
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reimbursement or payment under this Section 5.2 of expenses
incurred during a Plan Year shall at any time exceed the
balance credited to the Participant's Dependent care
Assistance Account under the Flexible Benefits Plan at the
time of the reimbursement or payment. The amount of any
Dependent Care Expenses not reimbursed or paid as a result of
the preceding sentence shall be carried over and reimbursed
or paid only if and when the balance in such Dependent Care
Assistance Account at or before the end of the Plan Year in
which such expenses are incurred. permits such reimbursement
or payment.
(b) Only Dependent Care Expenses which are
incurred while the Participant is a Participant in the Plan
and during the Plan Year in which the request for
reimbursement is submitted may be reimbur3ed under the Plan.
For purposes cf this rule1 Dependent Care Expenses shall be
deemed to have been incurred at the t~me the services which
generated the Dependent Care Expenses were provided and
requests for reimbursement which are submitted within ninety
(90) days following the end of the Plan Year shall be deemed
to have been submitted withir. the Plan Year.
(c) Any balance remaining in the Participant's
Dependent Care Assistance Account for any Plan Year after all
reimbursements or payments permitted hereunder have been made
shall not be carried over to reimburse or pay the Participant
for Dependent Care Expenl·es incurred during a subsequent Plan
7.
Year, and shall not be available to the Participant in any
other form or maruier, but shall remain the property of the
City, and the Participant shall forfeit all rights with
respect to such balance.
5.3 ~ual Report to Participants. on or before
January 31 of each calendar year, the Administrator shall
furnish to each Participant who has received dependent care
assistance during the prior calendar year a written statement
showing the a.f:lOunt of such assistance paid during such
calendar year with respect ~o the Participant.
ARTICLE VI -Termination of Participation.
In the EW"ent that a Participant ceases to be a
Participant in the Plan for any reason, the Participant's
salary reduction agreement relating to dependent care
assistance shall terminate irrmediately. The Participant (or
the Participant's estate) shall be entitled to reimbu~sement
or payment for Dependent Care Expenses in accordance with
Articles IV and V of the Plan.
ARTICLE VII -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
6 l S I •
D10ill 8.
the Plan is carried out, in accordance with its terms, for
the exclusive benefit of persons entitled to participate in
th~ 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 po~ers 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 the Administrator deems necessary or proper for the
efficient administration of the Plan;
(b) To interpret the Plan, and the Administrator's
interpretation t..hereof in good faith shall be final and
conclusive ~n 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;
(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 dell 1te responsibilities
under the Plan and to designate other persons to carry out
any of the Administrator's responsibilities under the Plan,
any such allocation. delegation or designation to be in
accordance with applicable requirements of law.
7.2 Exa.~ination of Records. The Administrator will
make available to each Participant such of its records under
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070~18 9.
the Plan as pertain to that Participant, for examination at
reasonable times by such Participant or that Participant's
leqal representative during normal business hours.
ARTICLE VIII -.. Amendment or Termination of .Plan.
8.1 Amendment of Plan. The City reserves the powei: at
any time or times to amend the provisions of the Plan to any
extent and in any manner that it may deem advisable.
8.2 Termination of Plan. The City will have no
obligation whatsoever to maintain the Plan for any given
length of time and may discontinue or terminate the Plan at
any time without liability. Upon termination or
discontinuance of the Plan, all elections and reductions in
compensation relating to the Plan shall terminate, and
reimbursements or payments shall be made only in accordance
with Articles IV and v of the Plan.
ARTICLE IX -Miscellaneous.
9.1 Limitation of Rights. Neither the establishment of
the Plan nor any .amendment thereof will be construed as
qiving to any Participant or other person any legal or
equitable right aqainst the Administrator or the City. except
as expressly provided herein. In no event will the terms of
employment or service of any Participant be modified or in
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10.
any way be affected hereby. Nothing herein contained shall
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 any time.
9.2 Benefits Solely From General Assets. The benefits
provided he1:eunder will be paid solely from the general
assets of the City. Nothing herein will be construed to
require the City or the Administrator to maintain any fund or
segregate any amount fot the benefit of any Participant, and
no Participant or other person shall have any claim against,
right to, or security or other interest in, any fund, account
or asset of the City from which any payment under the Plan
may be made.
9.3 Nonassiqnability of Rights. The right of any
Participant to receive any reimburs~nt or payment under the
Plan shall not be alienable by the Participant by assignment
or any other method, and will not be subject to be taken by
his creditors by any process whatsoever, and any attempt to
cause such right to be so subjected will not be recognized,
except to such extent as may be required by law.
9.4 No Guarantee of TaY. Consequences. Neither the
Administrator nor the City makes any C01I1Ditment or guarantee
that any amounts paid to or for the benefit of a Participant
under the Plan will be excludable from the Participant's
gross income for federal or state income tax purposes, or
that any other federal or state tax treatment will apply to
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0106.11
11.
or be available to any Participant. It shall be the
obligation of each Participant to determine whether each
payment under the Plan is excludable from the Part~cipant's
gross income for federal and state income tax purposes, and
to notify the City if the Participant has reason to believe
that any such payment is not so excludable.
9.5 Indemnification of City By Participants. If any
Participant receives one or mere payments or reimbursements
under the Plan that are not for Dependent Care Expenses, such
Participant shall indemnify and reimburse the City for any
liability it may incur for failure to withhold federal or
state income or employment tax from such payments or
reimbursements, including intere~~ and/or penalties.
9.6 Governing Law. The Plan will be construed,
administered and enforced according to applicable federal law
and the laws of the State of California.
IN WITNESS WHEREOF, the City has caused the Plan to b0
executed in its name and on its behalf by an official
thereunto duly authorized this
------• 1988.
ATTEsT:
____ day of
12.
hn D. Sutorius, Mayor of~
the City of Palo Alto