6.5. ERMUSR 01-15-2008 - Laserfiche WebLink

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ARTICLE IV. CONTRIBUTIONS 4.1 Salary Reduction Contributions. To the extent the cost of an Optional Benefit exceeds the Employer Contribution (if any), a Participant may elect in accordance with the Election procedures described in Article V to receive his or her full Compensation in cash, or to have a portion of such Compensation applied by the Employer toward the Participant's share of the cost of Optional Benefits. If so elected, the Participant's Compensation will be reduced, and an amount equal to the reduction shall be allocated by the Employer to the Optional Benefits designated by the Participant. A Participant's Compensation shall be reduced per pay period by pro-rata amounts of the Participant's total salary reduction Election with the exception of the calendar months in which there are three pay periods. Salary reduction is done on a pre-tax basis before any withholdings have been made. Only two paychecks per calendar month will reflect the salary reduction. 4.2 Imputation of Income. Pursuant to Section 1.125-1(h) of the proposed regulations, the entire cost of coverage for which the Participant is responsible may be paid pre-tax through this Plan. To the extent that payment includes coverage for anon-tax Dependent, the value of the coverage for that non-tax Dependent shall be imputed as income to the Participant as the coverage is provided. This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer Contributions. The preceding notwithstanding, if the cost of the coverage for anon-tax Dependent is paid with after-tax dollars, there shall be no imputation of income. Refer to Section 9.5 for a definition of "non-tax Dependent." 4.3 Salary Deduction Contributions. The Employer may permit amounts for which the Participant is responsible, but (1) cannot be paid with pre-tax dollars through salary reduction, or (2) cannot be paid with pre-tax dollars without a corresponding imputation of income described above, be funded with after-tax dollars pursuant to a salary deduction agreement. Such salary deductions shall be made on a periodic basis and relate to a Participant's Compensation after taxes and withholdings have been made. 4.4 Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of a Plan Year (e.g., month, pay period), per Participant. The amount of the Employer Contribution shall be communicated to the Participants prior to the start of each Plan Year so that they may consider it in making their Elections. The amount of the Employer Contribution may change from year to year as announced by the Employer prior to the Plan Year start. The Employer may designate different amounts for different groups of Eligible Employees. Where a Participant begins participation during the Plan Year rather than at the start of a Plan Year, the Employer Contribution shall be prorated based upon the number of complete calendar months remaining in the Plan Year and the number of calendar days remaining in the calendar month in which the Participant begins participation. 4.5 Maximum. Under no circumstances may a Participant's total salary reduction exceed the sum of (a) the cost of benefits provided through insurance or insurance types of benefits plus (b) the maximum Election amounts permitted under reimbursement plans minus (c) the Employer Contribution, if any. 4.6 No Trust. Nothing in this Plan is intended to require the establishment of a trust. The benefits paid under this Plan attributable to Employer Contributions and Participant contributions including, but not limited to, salary reductions amounts are paid from the Employer's general assets. ©2007 Hitesman & Assaiates, P.A. $ Elk River Municipal Utilities 122707 Flexible Benefits Plan