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RESOLUTION NO. 2014- 02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, AMENDING RESOLUTION NO. 2013-13 TO INCLUDE RECENT
IRS NOTICE 2013-71 WHICH RELAXES THE USE -IT -OR -LOSE -IT RULE THAT
APPLIES TO HEALTH FLEXIBLE SPENDING ARRANGEMENTS
WHEREAS, Section 125 of the Internal Revenue Code allows employees to choose
among two or more appropriate levels of health benefits for themselves and their families; and
WHEREAS, the City of Palm Desert first adopted its flexible benefits plan in 1999; and
WHEREAS, over the years the plan has been amended to reflect changes in Federal law
and the City's benefits structure; and
WHEREAS, the City of Palm Desert most recently restated the current plan in its entirety
for ease of recordkeeping in 2013; and
WHEREAS, the Internal Revenue Service issued Notice No. 2013-71 in October 2013 to
relax the use -it -or -lose -it rule.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Palm Desert,
California approve the attached plan amendment and allow up to $500 of unused amounts
remaining at the end of the plan year to be paid in the following plan year in accordance with IRS
Notice No. 2013-71.
PASSED, APPROVED AND ADOPTED at the regular meeting of the Palm Desert City
Council, held on this 23`d day of January, 2014, by the following vote to wit:
AYES: BENSON, HARNIK, SPIEGEL, WEBER, and TANNER
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
VAN G. TANNER, MAYOR
IPA Emu
..-. RAELL D. KLASSEN, C 1 Y CLERK
CITY OF PALM DESERT, CALIFORNIA
RESOLUTION NO. 2014-02
1.1
PLAN AMENDMENT
ARTICLE I
PREAMBLE
Adoption and effective date of amendment. The Employer adopts this
Amendment to the City of Palm Desert Health Care Spending Account Plan
("Plan") to reflect changes to Internal Revenue Code (IRC) Section 125(i), as
amended by the Internal Revenue Service (IRS) Notice 2013-17. The employer
and Plan sponsor intends this Amendment as good faith compliance with the
requirements of this Notice. This Amendment shall be effective on or after the
date the Employer elects in Section 2.1 below.
1.2 Election of Carryover. To the extent that the Plan contains "grace period"
language, said language for any "grace period" for the health flexible spending
account (health FSA) will be voided for Plan years following the Plan year that
carryover is adopted and such language shall be replaced with the "carryover"
language outlined below.
1.3 Supersession of inconsistent provisions. This Amendment shall supersede
the provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this Amendment.
ARTICLE 11
CARRYOVER ELECTION
2.1 Effective Date. This Amendment is entered into as of the date outlined below
and shall be effective for 54'the 2013 Plan year or ❑ the 2014 Plan year
and beyond.
2.2 Carryover Amount. The Plan shall provide for a carryover of $500 of any
amount remaining unused in a health FSA as of the end of the Plan year. Such
carryover amount may be used to pay or reimburse medical expenses under the
health FSA incurred during the entire Plan year to which it is carried over.
2.3 Participant Opt Out. Notwithstanding the foregoing, any Plan participant shall
have the right to opt out of the carryover if such participant has already enrolled
in a healthcare savings account for the following Plan year.
This Amendment has been executed this 23rd day of January, 2014.
Name of,ployer: CITY OF PALM DESERT
By:
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dhn M. Wohlmuth, City Manager owl