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CITY OF RAMSEY, NOTES TO FINANCIAL December 31, Note 11. DEFERRED COMPENSATION PLANS MINNESOTA STATEMENTS 1992 The City offers its employees four 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 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 market 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. The four trustees used by the City are The Minnesota State Deferred Compensation Plan, Kemper Investor Life Insurance Company, The Great -West Life Assurance Company and Metropolitan Life Insurance Company. Assets of the plans are held by the trustees and are reflected in these statements as Agency Funds at market value. Note 12. FLEXIBLE BENEFIT PLAN The City has a flexible benefit plan which is classified as a "cafeteria plan" under Section 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 liable for claims against the total amount of participant's annual contributions to 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.