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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 2002 NOTE 9 — DEFINED CONTRIBUTION PENSION PLAN — FIRE RELIEF ASSOCIATION (CONTINUED) C. Contributions Required and Contributions Made Contributions to the plan include State Fire Aid pursuant to Minnesota Statutes Chapter 69. In addition, the City is allowed to make voluntary contributions of other public funds pursuant to Minnesota Statutes Chapter 69. The City's contribution to the Relief Association in 2002, including both City and State Fire Aid passed through the City totaled $69,189. This contribution represents 47% of the current 2002 covered payroll of $146,072. There were no current year changes in plan provisions. NOTE 10 — FLEXIBLE BENEFIT PLAN The City has a flexible benefit plan which is classified as a "cafeteria plan" under § 125 of the Internal Revenue Code. All full -time and part-time regular employees of the City are eligible. Eligible employees can elect to participate by contributing pre -tax dollars withheld from payroll checks to the plan for health and dental care, dependent care, life insurance premiums, and disability insurance benefits. Payments are made from the plan to participating employees upon submitting a request for reimbursement of eligible expenses actually incurred by the participant. Before the beginning of the plan year, which is from January 1 to December 31, each participant designates a total amount of pre -tax dollars to be contributed to the plan during the year. At December 31, the City is contingently Iiable for claims against the total amount of participants' annual contributions to the health and dental care portion of the plan, whether or not such contributions have been made. The City serves as trustee and handles all plan record keeping. The plan is included in the financial statements as an Expendable Trust Fund. All plan property and income attributable to that property is solely the property of the City subject to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of the City in an amount equal to the eligible health care and dependent care expenses incurred by the participants. The City believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. -30-