6.5. ERMUSR 01-15-2008 - Laserfiche WebLink

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(a) the Participant's Earned Income for the tax year; (b) the actual or deemed Earned Income of the Participant's Spouse for the tax year; or (c) $5,000, or in the case of a Participant who is married and filing a separate income tax return from his or her Spouse, $2,500. This maximum includes the Employer Contribution (if any), DC Account forfeitures and the Participant's salary reduction. If a Participant is married and the spouse of the Participant also participates in a dependent care program under Section 129 of the Code, the combined reimbursements may not exceed the limits described above for the tax year. It shall be the Participant's responsibility to monitor the combined reimbursements. 12.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan during a Plan Year, no further allocations will be credited to the DC Account. However, reimbursements shall continue for eligible Dependent Care Expenses incurred before participation stopped may be reimbursed within ninety (90) days following termination of participation. The remainder of the Participant's DC Account shall be forfeited in accordance with Section 5.6. 12.10 Participant's Death. In the event a Participant dies having incurred an eligible Dependent Care Expense which would have been reimbursable out of the Participant's DC Account had the Participant not died and a person or the Participant's estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's DC Account shall be forfeited in accordance with Section 5.6. 12.11 Nondiscrimination. Not more than twenty-five percent (25%) of the amounts paid or incurred by the Employer for Dependent care assistance during the Plan Year shall be provided to Participants who are shareholders or owners (or their Spouses or Dependents) of more than five percent (5%) of the stock or of the capital or profit interest in the Employer. This portion of the Plan shall not discriminate in favor of Highly Compensated Employees or their Dependents with respect to eligibility, contributions or benefits. The average eligible Dependent Care Expenses paid to Non-Highly Compensated Employees shall be at least fifty-five (55%) of the average eligible Dependent Care Expenses paid to Highly Compensated Employees. If benefits are provided through salary reduction agreements, Employees with annual compensation less than $25,000 may be excluded. If the Plan Administrator determines that the Plan is or will be discriminatory, the Plan Administrator may take any action permitted by law to avoid such result. If the Plan fails any of these requirements, benefits provided under this portion of the Plan will become taxable to the extent required by law. 12.12 DC Account Forfeiture. Amounts attributed to a Participant's DC Account for any Plan Year shall be used only to reimburse the Participant for eligible Dependent Care Expenses incurred during such Plan Year. Any balance remaining in a Participant's DC Account for a Plan Year shall be forfeited on the first day following the last day of March immediately following the end of such Plan Year (the "claims run-out period's and shall be forfeited in accordance with Section 5.6. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 12.13 Dependent Care Limitations. Reimbursement or payment of eligible Dependent Care Expenses shall be made by the Employer only in the event and to the extent that such reimbursement or payment is: (a) not provided for under any insurance policy, whether the premium on such policy is paid by the Employer or an individual, and (b) not provided for or reimbursable under any other Plan or policy. ©2007 Hitesman & Associates, P.A. 30 Elk River Municipal Utilities 122707 Flexible Benefits Plan