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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,1997 Note 11. DEFINED CONTRIBUTION PENSION PLAN -FIRE RELIEF ASSOCIATION (continued) C. Contributions Reo~rired 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 1997 was $41,372 which represents the entire amount of State fire aid received by the City on behalf of the Relief Association. This contribution represents 78% of the current 1997 covered payroll of $53,277. There were no current year changes in plan provisions. D. Related Party Investments As of December 31, 1997, and for the fiscal year then ended, the Plan held no securities issued by the City or other related parties. Note 12. DEFERRED COMPENSATION PLANS The City offers its employees six deferred compensation plans created in accordance with Internal Revenue Code Section 457. The plans permit employees to defer a portion of their salary into future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergency. The six trustees used by the City are the Minnesota State Deferred Compensation Plan, Kemper Investor Life Insurance Company, The Great-West Life Assurance Company, Minnesota Mutual Life Insurance Company, Metropolitan Life Insurance Company, and ICMA Retirement Corporation. During the year ended December 31, 1997, the City's deferred compensation plan administrators for the Minnesota State Deferred Compensation Plan and the ICMA Retirement Corporation placed all plan assets in ' trust for the exclusive benefit of the plan participants or their beneficiaries. Consequently, these assets are no longer the property of the City and the Agency Funds in which the assets had been reported were closed. ' Of the remaining four administrators, the amounts of compensation deferred under the plans, all property and rights purchased with those amounts, and all income attributable to those amounts are solely the property and rights of the City, subject to the claims of the City's general creditors. Participants' rights under the plans are equal to those of general creditors of the City in an amount equal to the fair mazket value of the deferred account for each participant. It is the City's belief that they have no liability for losses under the plans but do have the duty of due care that would be required of an ordinary prudent investor. The City also believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. Note 13. FLEXIBLE BENEFIT PLAN The City has a flexible benefit plan which is classified as a "cafeteria plan" under Section 125 of the Intemal ' 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. -26-