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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 1998 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 1998 was $44,532 which represents the entire amount of State fire aid received by the City on behalf of the Relief Association. This contribution represents 67% of the current 1998 covered payroll of $66,709. There were no current year changes in plan provisions. D. Related Party Investments As of December 31, 1998, and for the fiscal year then ended, the Plan held no securities issued by the City or other related parties. 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 ofpre-tax dollars to be contributed to the plan during the year. At December 31, the City is contingently liable 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. -28-