Loading...
1b Suburban Transit AssociationCITYOF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen. I;4N 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fz~: 952.227.1190 Engineering Fax' 952.227.1170 Finance F~;ne. 952.2271140 ~,,.C~2~7 ~,~ ..... .~_.~Li iU Park & Recreation ~3L.LL,. [ ILU Fa',:: 952227ili0 23!0 Cc.u~ter Boulevard ?nr:,~: 952.227.1400 pax. ~3z.~ 1404 Planning & Natural Resources ?none: 952.227.!t30 Fa,:: 95£227.!!10 Public Works i59i Far,: R3ad Phone: 952.227.1300 Fac,,: 952.227.i310 Senior Center Phcne: 952.227.1i25 Fax: 952.227.1!i0 Web Site TO: FROM: DATE: SUB J: Todd Gerhardt, City Manager Kate Aanenson, Community Development Director September 13, 2002 Approve Resolution Amending the Bylaws for Suburban Transit Association Attached is a resolution recommending changes to the bylaws for the Suburban Transit Association (all eleven opt-out communities). The proposed changes were reviewed by Southwest Metro Transit's legal advisor and are summarized in the attached memo. Ratification of the bylaws is required by 2/3 of the "member cities." The changes are minor and staff recommends approval. ATTACHMENTS o Memo from Messerli & Kramer, P.A. Resolution Relating to Suburban Transit Association Bylaws The City of Chanhassen · ,4, qroz, inq community with ciea,q IS:es. quality schools, a charming downtown, thriv.ng businesses, winding trails, and beautiful parks. A grot place to live, work. and play. Messerli SOUTttW£sT ~£TRO TRANSIT 13500 Technoloq¥' Dri','e Eden Prairie, t'tinnes0ta 55344 PuoN[: 952,949.2Bl15 (2287) FAx: 952.974,7997 [HA]L: custservOswtransit.or, W~:~S~T£: www. swtrc~nsit.or9 Kramer professional association MEMORANDUM TO: FROM: STA Member Cities STA Board of Directors DATE: August 28, 2002 Proposed Changes to the STA Bylaws The STA Board of Directors has recommended the following amendments to the STA Bylaws. In order for the changes to take effect, ratification is required by 2/3 of member city councils. If you have any questions about the proposed changes, please feel fi'ee to contact Tom Poul, STA Lobbyist, at 651/228-9757 o1' tpoul~mandklaw.com. Eliminates listing of initial members of STA. Defines membership in STA in general terms. Art. VI, § 1 Changes length of te~ns of officers fi'om one year to two years. Art, VII, § 1 States that meetings of the Board shall be "called" at least two times per year, rather than "held quarterly," in order to be consistent with the JCA. The JCA requires meetings to be called at least two times per year. Art. VII, § 3 Changes procedure to call a special meeting of the Board of Directors to make this language consistent with the language in the JCA. Art. X, § 1 Changes procedures to propose and ratify amendments to the Bylaws to be consistent with procedures to amend the JCA, as stated in the JCA. CITY OF RESOLUTION NO. A RESOLUTION RELATING TO SUBURBAN TRANSIT ASSOCIATION BYLAWS BE IT RESOLVED, by the City Council of the City of Minnesota, as follows: WHEREAS, Minnesota Statutes Section 471.59 permits two or more governmental units, by agreement of their governing bodies, to jointly and cooperatively exercise any power common to each of them, and WHEREAS, the parties have entered into this Joint and Cooperative Agreement to develop programs on matters of mutual concern and interest and identify, review and actively oppose proposals which may be in conflict with the interest of the members. NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Manager are hereby authorized and directed to execute the Bylaws as amended and attached hereto. ADOPTED this__ day of ,200__ , Mayor ATTEST: , City Manager CITYOF CH HASSEN 7700 Market Boulevard PO Bcx 147 u~ ~,~nn~,ss~,. ~,,iN 553i7 ~dministration Phon~: 952.227.1100 Fax: 952.227.1i10 Building Inspections ,~?J~: 952.227.1180 Fa:,:: 952.227.1199 Engineering '-_:.: ~5£.227.1 ::... Finance ~52.227.i110 Park & Recreation ?:-,e' ¢.:2 227.i i£0 Fa:,.: 952 227.1ii0 ?'?.'~.:' 952.227.1 95'2.227.! 404 Planning & Natural Resources %::'e: ~.:~..22;. ~130 Fa'< ~52.227.11i0 Public Works i59i Park Road Phsne: 952.227.i300 Fax: ~,52.227.1~10 Senior Center Phone: 952.227.i i 25 Fa;:: 952.227.i110 Web Site ,v,v,':..;!.cha:.hass~.n.mn.us MEMORANDUM TO: FROM: DATE: RE: Todd Gerhardt, City Manager Justin Miller, Assistant to the City Manager September 16, 2002 Post Employment Health Care Savings Plan - Modification to the City Personnel Policy Attached you will find a document outlining the proposed language for the City's Post- Employment Health Care Plan. In a vote of City employees, 70.8% voted to implement this plan. It is my recommendation that the City Council approve the plan as approved by the City employees and amend the City's Personnel Policy to reflect this change. BACKGROUND The State of Minnesota recently granted cities the ability to create Post- Employment Health Care Plans for their employees. Basically, these plans allow for tax-free contributions to a health care savings plan that can be accessed after the employee departs from employment with the City of Chanhassen. Withdrawals, which are also tax-free, would be able to be used for a variety of health care expenses, including insurance premiums, prescription drugs, doctor's visits, or numerous other expenses as defined by the Internal Revenue Service. The Minnesota State Retirement System will administer the City's plan and employees will be able to choose from several different investment options for their contributions. The structure of the plan is similar to other plans already being used by cities and school districts across the state. Contributions are based upon the number of years of service in PERA, the State's public employee retirement system, with the level of contributions increasing as years of service increase. At the end of each calendar year, employees with over 600 hours of accrued sick time will also have half of the hours over 600 converted into cash and deposited into their account. In addition, at the time of separation of employment with the City any vacation time accrued will be converted into cash and deposited into their account, as well as half of the severance/wellness payouts if they qualify for such benefits. The final contribution to the plan will be in the form of FICA payments, which would have been paid by the City to the federal government if these contributions were paid in cash to the employee. In essence, this contribution in-lieu of FICA is the employer's contribution to the employee's plan. Uu,~n~u,~,. The City' of Chaflllassen · .z. ,qr,qv,irln rnr'nm mif,, ?.'i~ rl~sn lsECq oua!ity snhnn q ~ rh~jnn x ..... t ..... [hrivifin h, qinpqqnc winding trails, and beautiful ,*,~'~ A or, at n!ac¢ t~ live v,'o~ d,,u play. Example: An employee with 15 years of PERA service making $5.1,100 per year would make the following contributions: 1% of bi-weekly pay: Tax savings: City Contribution: Net Annual Out-of-Pocket Cost: Total Annual Accumulation: Net Annual Tax Benefit: $19.65 per paycheck $5.50 per paycheck $1.50 per paycheck $367.90 $549.90 $182.00 This is before any sick time/vacation/severance payouts are converted into cash and deposited into their account. This plan can be amended as often as necessary, but will be reviewed no later than two years after approval by the City Council. RECOMMENDATION The City Council adopt the attached resolution and approve the formation of a Post-Employment Health Care Savings Plan. Attachments CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA DATE: September 23~ 2002 RESOLUTION NO: MOTION BY: SECONDED BY: ADOPT A RESOLUTION APPROVING A POST-EMPLOYMENT HEALTH CARE SAVINGS PLAN AND AMENDING THE PERSONNEL POLICY TO REFLECT THE CHANGE WHEREAS, the State of Minnesota has recently allowed cities to create Post-Employment Health Care plans for its employees; and WHEREAS, the City of Chanhassen's employees have discussed creating such a plan and 70.8% voted to create the plan outlined below; NOW, THEREFORE, be it resolved by the City Council of the City of Chanhassen, Minnesota: 1. That the following Post-Employment Health Care Savings Plan be adopted: Employee % of Pay Scale Employees with 0-10 years of PERA service will contribute .5% of pay. Employees with 11-20 years of PERA service will contribute 1% of pay. Employees with 21-24 years of PERA service will contribute 2% of pay. Employees with 25+ years of PERA service will contribute 5% of pay. Proposed Sick Hour Conversions All employees that have over 600 hours of accumulated sick time will have V2 (one-half) of those hours (over 600) converted into cash tax-free, only if it is deposited in their Post Retirement Health Care Savings Account at the end of each calendar year. Proposed Severance/Wellness Pay Outs All eligible employees who have worked for the City for at least 5 years and have accumulated sick time at the time they leave the city's employment will have ½ (one-half) of those hours convened into cash and deposited into their Post Retirement Health Care Savings Account. Proposed Vacation Hours Conversion All employees that have accumulated vacation hours at the time they leave the city's employment will have 100% of those hours converted into cash and deposited in their Post Retirement Health Care Savings Account. FICA Contribution An employee who receives a credit in the Health Care Savings Plan must be paid an additional credit to the Health Care Savings Plan in an amount equal to the HCA taxes that would have been payable to the federal government by the City if the severance pay had been paid to the employee in cash. The contract language will be reviewed within two years. 2. That the City's Personnel Policy be amended to reflect these changes. Passed and adopted by the Chanhassen City Council this 23rd day of September, 2002. ATTEST: Todd Gerhardt, City Manager Linda C. Jansen, Mayor YES NO ABSENT -!::~ 0 I~O 0'~ 0 0 r'o o -i:~ 4::::.. .t,o .-,..~ .to .-~ .o .-,..o .t,o .o:, 0 4:~ r'o c0 ob 4:::~. o') o .~ o oz §> oz x 'Ti U~ II 0 C~O0000000 ~0 ~ ~ ~ ~ 0 ~0 ~ ~ ~ ~ ~ 0 0 ~ ~ ~ ~ -"* '~- -..*. 0 0 0 0 0 0 0 0 0 .-~. r~5 o~ o.~ (.o o ob Go o ...< ~ o + '4- Z --4 0"0 ~ 0 m T 0 P POST RETIREMENT '~ HEALTH CARE SAVINGS PLAN What You Need to Know About the Post Retirement Health Care Sav ngs Plan ..... '?re Dr~vc. 5uik 300 .., ~,,u:..~LN 2002 MSRS 2201 Administered by the Minnesota State Retirement System The post retirement health care sa'rings plan is an employer-sponsored program that allows employees to save money into an account to pay medical expenses and/or health insurance premiums after termination of public service. Employees will be able to choose among seven different investment options provided by thc State Board of Inx'cstmcnt. Assets in thc account will accumulate tax-fl-ce, and since t)ayouts arc used for medical expenses, they will remain tax-fi'ce. Employer Contributions: For example, an employer could elect to put a specific dollar amount into employees' accounts, or set aside a percentage of employees' salaries into the accounts. Mandatory Employee Contributions: For example, a portion of the next salaD, increase could be required to be set aside in a plan. Severance Pa)': For example, many public employers pa), unused vacation or sick leave as severance pay at the time of termination. All or a portion of the severance pay naa), be required to be put into the plan. I_aws of ,'xlinnesota 2001, Chapter 352.98, authorizes MSRS to, offer this l'~rogram to state cmplo)'ccs, as well as all other ?vcrnmental subdivisions. Thc Internal Rex'cna. to 5cl'x'icc (IRS) authorizes government !>o~.',ics to cstxblish "funds" which arc dccmcd to be an "iznt%ral lS:U't'' of thc organization. IRS rulings state that i':'evidi~¥ cmp!oycc v,'clfarc benefits to retirees is an "cs>cnti:d Junctit~" of state or local government's aclivitics. Thc iRS also c!ccmcd tl~at l>rovicting retiree hca!th benefits is xn "essential function." Therefore, it is consiclcrcd an :nt%ral part of thc gOVCl'nlllClqt'5 actix'itics and. as a result. it ct~_job-s tl~c cntitb"s tax exempt status. (In %'casury !<c:~ulation St'dion 301.7701-1 (a)(3)) Employees covered by a bargaining unit: Amounts to be put into the account must be negotiated or agreed to by hoth thc bargaining unit and employer. F-ml~loyccs not covered b)' a bargaining unit: .Xmounts to bc pul into thc account must be included in a l~Crsonncl policy and must cover all employees covered under thc pcr>onnc] arrangement. The post retirement health care savings plan allows emplo)'ces to set aside money to cover the ever-increasing costs of health insurance and medical expenses after termination of public service. \Vhile deferred compensation plans or retirement accounts provide a tax-deferred benefit, amc;u'.:qts paid out arc considered taxable income. Under the post :-ctiremcnt health care savings plan, amounts contributed are tax-free and no taxes are paid on amounts to pay hcahh and dental insurance premiums and to cover ottt-of-poc!<ct medical expenses. This taxa,~ dv'~.nt,oc',o could result in significant savings to you and your famil): For example, let's sa)' you are eligible f,~r 55,000 in severance. If paid in cash, after subtracting federal, state, and FICA (social security and rnedicare) taxes, thc net amount of the payment would be approximately $3,000. If that same amount was transferred into your post retirement health care savings plan, the entire amount of 55,000 would be available to provide health care coverage. The employee's spouse and dependents must use the account for medical expenses which will be tax-free. If no spouse or dependents, the account balance will be paid to a designated beneficiary or to the estate. At this point, the payment is subject to state and federal taxes; however, it is still exempt from FICA (7.65%). 2 The post retirement health care savings plan allows },our employer an opportunity to offer a benefit that you can use to cover the rising cost of health care. Employers are not required to pa}' FICA (7.65%) taxes on amounts contributed to this plan. Thc main responsibility is to determine how contributions will bc made to the plan and making contributions to t}Sc plan on behalf of eligible employees. MSRS will provid~ ,:our employer with cmploTee enrollment kits to get you started. The chart below shows the investment options, and the annual investment fee charge for each investment option: Account Name Annual Fee* Fi~ed Interest 0.13% Money ,'Market 0.01% Bond Market 0.09% Income Share 0.01% Common Stock Index 0.02% Growth Share 0.26% Imemational 0.3296 ara sul0jact to change. Your employer will torovide you with an enrollment kit. Complete thc fom'~5 and return them to your employer. 1' "x'~ ' ~ _. -~}:csc forms n:'c o~,.:,',ctcd to XlSR< Thc forms ask ,!:, , <LtC}~ :15 !~.t:'~C ;li!(~ :lddl'c'ss 35 L','c'i] i15 i~CllCflCIiil'V . (V('x','W. iiSSl'N.StAtC.i~}i2.US) Of O12 a paper dOCUillCI1[. Yes. You will receive an account statement every six months. It will be mailed directly to }'our residence. Thc administrative fees to administer the plan are dedm from ypur account. You ,,','ill be charged 0.15% of your 3CCOLlltt balalqCC each quarter (0.60% per year). For example, if you have an account value of $ ] 0,000, 515 per quarter will be deducted from your account. Thc maximum annual fee chat-gad on an account will be 5140 or 535 per quarter. All fees are subject to change. You wil': t0c alolc to clnoosc :',:u.o:~g 5,:vcn di,r[cYcnt iliVC>l, lllCll[ Ol)tions. You You are eligible to draw from },our account under an}' of th following circumstances: · ![ you leave employment ° If yOU retire · If Ton ara collecting a disability benefit from one of tiaa public pension plans · If you al',: on a medical leave (six months or longer) , If vou :;re on a leave of absence (one year or longer) 4 MSRS will reimburse you directly for your out-of-pocket medical expenses. Payments will be made to plan participants who submit proper claims ever), week. However, there is a $75 rninimum reimbursement* rcquircmcnt. Do not submit a claim until you have collected .575, or more worth of receipts. ~ The minimum reimbursement is subject to change. Eligible medical/dental expense account expenses are those expenses which are deductible for federal income tax purposes. _These include expenses related to the diagnosis, care, treatment or prevention of disease (see examples below). For n'tore exarnples, see IRS Publication 502 which is available from your local IRS office. Reimbursements paid fi-om the post retirement health car~ savings plan to cover hcahh insurance and medical expenses will novel' be taxed. No income tax withholding or reporting 2--~-ectuired. I lov,'cx'cn it i.,- inaportant that you understand that this can o~lv bc used to offset hca!LIn care costs or the Your HCSP account may be used to cover the cost of health and dental insurance, long-term care insurance, and monthly Medicare B premiums. In addition, a list of costs that can be reimbursed is shoxx~ below: · Acupunctm'c and acupressure · ?Xi!' rtl,.. ~,~c~ prcscril0cd for treatment of allergies · Alcoholism or drug dependency tt-catmont and tl'CatlllCllt COlliers · ,',nificia] limbs and teeth . tqm'th coni~'o] clcvicc5 ¢;v,'ith prescription) · t¢i~'t}~ control pills · i?,miilc books and magazines (to tlqe extent prices exceed · Ca~-k?cci,d medical equipment within) · Chilctb/rt}~ lWcparation classes for mother, cxc!uding po~-tion fo~' mother's coach · Condona> (xvitl~ iwcscrit)tion) Dental treatment, including dentures, and orthodontia (braces anti retainers) Diathcrmv Drags which require a prescription to be purchased Operations and related treatment Eve examination Eyeglasses 5 6 Fees to doctors, t:ospitals, etc. for: Anesthesiologist Chiropodists Chiropractor Christian Scion<'c Pr~tctitioncrs Clinic (;yn cco] ogi st hlidwifc ~',. ~i~.~::'i::~ ~' ._ '..-:. :::. : .: ':::.'. ::,: :' :':' ~ .:- ::~ 5-.,:'~';:c- :~. :'.., :.:.,i::: :.: :,. ......... ::.:: ~' .. ~ .::: ..... :'i',.~ ~-,~;-~:: ::.':, . Xlcntally handicapped, special home for · Nu~es expenses and board · Nursing care · ~ursing home (if for medical reasons) · Olostc~rical expenses · Orga~n clonation, organ transplants ' (~x}'gcn ccluipnqcnt (5cc !it5 l-'c~i~. 502 for <uidclincs5 ...... - ..... ~: c , = ::x'>::~:::i'.' o;' ::::'::t:t:lv '::. ri:::.:: i:,::, :: :.: ::':, ,:':c i:::' ibc dc'n[ :::, ;':.::.'5 :i:,.' ~:'.:ci:o part of-i-:' }?:'o~rnms for thc .-: , : ,: . li ..-i 'i. :-,: ........ ,. i 1,.,,,~. .... mcclicM expense: ,.~r: clo,~or.., or i':'~' :74'~: i",'C ~':',:':~".c,',". :,,i.,:: c'xj~C~:5c'5 [o;' cFsc~::i::~ !'::cdic;t~ :,.' p~ :' '.uilc pitts x~ .:5C L-tOi:~V ",-~sunl ~dcrt s,,'s~cm for dcaf ','i,.~m.p~ which require a prcscription to t0e '~','i~cclc'hair X-rays 7 8 · Cosmetic surgery, electrolysis, and hair transplants that are not medically necessary · Fees for exercise, athletic, or hcahh club membership · \Vcigl'tt rccluction program for general well-being · Stop smoking I31mOgl'~llllS [OF gcncnd xvcll-bcing · ID~mcing or hnllct, ex'ch if rccomn~cnclcd bv doctor · .-qnv charges iiICtll i-col out~iclc of p~3 ~ '7 c-xr c',-cn if paid ~ ]', ...... _ [}id }~l~]~ ~'Ch >[[d At WWW. 111SI'S.SI~IIC.II111.US. JO 7 Tke PERA~r4v~/ New plan designed to help public employees pal/for retirement health care costs and more It's no secret--health care costs are rising at an alarming rate in America. And there's no reason to expect that situation to change an), time soon. For many retirees, health care is the biggest expense they face every month, often consuming more than a third of their income. How do you plan for that expense when con- templating retirement? The Minnesota State Retirement System (MSRS) may have tile answer --the Post Retirement Health Care Savings Plan. Approved by the Minnesota Legislature this )'ear, the program will allow current active pub- lic employees, through negotiation, to set aside a part of their paycheck or other compensation to help defray the cost of future health care costs. Here's how it works. Contributions are tax [ree Employee and employer contributions are not subject to state or federal taxes..,ks with contri- butions to a tax-deferred retirement plan, that means contributions into the plan lower an indi- vidual's taxable income. Growth is tax tree Public employees participating in tile plan will have their choice of seven different investment options--fixed interest, money market, bond market, stock index, growth share, income share and international. The investments areadminis- tered by the State Board of Investment and are identical to accounts available through thc state's deferred compensation plan. All increases in the value of the accounts are tax free. Puyrn~nls are lax free Funds in an account become available when a participant terminates his or her public service. They also become available when a person begins collecting a disability benefit from a pub- lic pension plan, is on medical leave for six months or longer, or oil a leave of absence for one year or more. Assets in the account can be used to pay for medical costs, health and long-term care insur- ance premiums, and even ~Xledicare Part B pre- miums. Reimbursements cover not only the par- ticipant, but also a spouse and dependent clnil- dren. All funds, if used for allowable medical expenses, are withdrawn ta× free. If a partici- ,CSP union pant should die, the funds in an account can be transferred to a spouse or dependent child and still be used to reimburse health care costs on a tax-free basis. Should there be no spouse or dependent children, the funds are dis- persed to a beneficiary or to the individ- tlal's estate. Only then would the5' become taxable. The list of allowable reimbursements is long, and those not allowed quite short. Basically, if ifs medically-related and legal, it's probably covered. Participation ~iTt Ir/ The decision to take part he pro- gram is made at the bargaining table by employers and union representatives. The amount to be put in the account is negotiated, whether it is a dollar amount or a percentage of salary. However, employee contributions, if agreed to, are mandatory for all members of the bar- gaining unit to retain the tax-free status of the plan. All or a portion of sever- ance pa5', unused vacation or sick leave can also be contributed into the plan. \Vhile participation itl tile program will probably be a part of many future union settlements, Ron Schweitzer, assistant director of MSRS, said it is not necessary to wait until a contract is up for renewal. A letter of agreement between a union local and an employer is sufficient to get the program started. For indMduals who are not part of a bargaining unit, participation is available if it is made part of a personnel policy covering all employees subject to that arrangement. The emphasis is that if it is available to one individual, it has to be available to all people similarly ~ore employed, c~vailczble 'More information on the program is sile, available from MSRS by calling 800 657- 5757 or (6515 296-2761, or b5' visiting t,e" accoUnt ed dolla~:'amm percenta .., _ · .. .- . -7 ._ Publii emp.li": '"-' partici plan will choice of i ferent inw options. TM meats are . tered by the Board of and are' identical accounts..` through. . deferred C?m tion plan. !~,i5!',.:...:. ::_. ' .Z.' .:.?':~ ', ... President Bush recently signed the Economic Growth & Tax Relief Reconciliation Act (EGTRRA) of 2001 into law. For the first time in more than a decade, significant enhancements will be made to individual and employer- sponsored tax-deferred retirement plans such as IR/ks, 457, 403(b), 401(k) and other defined contribution and savings plans. \\'hat is behind this new legislation.'? In simple terms, millions of American workers are personally not saving enough or not saving at all for retirement. And traditional retirement income sources such as pensions and social security aren't available to many workers and will not provide enough retirement income for others. An underlying goal of EGTRRA is to help all workers recognize that personal savings is critical to a financially secure retirement, and that even small account balances, with the benefit of tax-deferral, compotlnded interest, reasonable investment returns, and consistent contributions over time will provide enhanced retirement security. Most EGTRRA provisions become effective January 1, 2002, though others will become effective in later years. However, many of the provisions expire on December 31, 2010, at which time they revert to the current pension laxv standards unless they are extended at that time. So for now, an open "window of opportunity" exists for all Americans to take advantage of enhanced tax-deferred savings plans. Employers are not required to offer all of EGTRRA's many provisions, and not all provisions are effective on January 1, 2002. However, we expect that most employers will offer the major enhancements such as increased contribution limits and catch-up opportunities as soon as possible in 2002. BenefitsCorp/Great-West, your defined contribution plan's service provider, will work with your employer during the coming months to confirm and communicate which provisions will become available to you and the timing of their availability. \Ve ask for your patience and that you hold your calls, but urge you to watch the mail and your plan's \Veb site for more information in the coming months about enhanced opportunities for you to build more significant retirement savings. Following is a very brief overview of the most significant pension provisions included in the law that apply to employer-sponsored retirement plans such as yours: · Increased Deferral Limits - Employee deferral limits to 457, 401(k) and 403(b) plans will be increased from $8,500 (457) and $10,500 (401(k) and 403(b)), to $11,000 in 2002, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005 and $15,000 in 2006, then indexed in $500 increments. · Increased 457 Catch-Up Limits - 457 participants currently may contribute $15,000 per year in the three years prior to normal retirement age. The new 457 plan catch-up limit will be $22,000 in 2002, increasing to $30,000 in 2006. · Additional Contributions for Workers Over Age 50 - Participants age 50 or over will be able to make additional contributions to a 401 (k), 403(b) or 457 plan: $1,000 in 2002, $2000 in 2003, $3,000 in 2004, and $5,000 in 2006, then indexed in $500 increments. 457 participants may not use this provision during the three-year period they are using regular catch-up. Increased Combined Plan Limits- Participants in both a 457 and a 401(k) plan, or a457 and a 403(b) plan will be able to contribute the maximum amount to each plan. In 2002, this would be $11,000 to each plan for a total of $22,000. · Simplified 457 Plan Distributions - When leaving service, 457 plan participants will be able to leave their money in the plan without having to elect a distribution date. Payments will be able to be requested at any time, and will no longer have to be taken in substantially non-increasing amounts paid at least annually. · Rollovers between Various Plans and IRAs -457 plan assets will be able to be rolled into an IRA. Employers sponsoring a 401 (a)/(k), 403(b), 457 and/or an IRA may all6w their plans to accept rollovers from other 40 l(a)/(k), 403(b), 457 plans and/or IRAs. · Tax Credits for Lower Income Savers- Participants in a 40 l(k), 403(b) or 457 with income tinder specified threshholds will receive a tax credit for contributing to a plan. Again, please watch the mail and your plan's Web site in the future months for more detailed information about the opportunities ofEGTRRA! lmcstment eptions may be offered either through mutual funds and/or a group fixed and variable annuity issued by Great-West Liti: & Annuity Insurance Company. For more :omplcte information, including fccs and expenses, you ma5, obtain applicable prospectuses and/or disclosure documents from your registered representative. Read them b¢l'orc im'csting. Securities, u'hct~ offered, are offeretl through BenefitsCorp Equities, Inc., a wholly owned subsidiary of Great-West. Form# PensionLeeis2t 01 g- "O m · -r 0 :~ ~ 3:: IT1 "U '~ ~ -~ 0 O~ 0 ~ 0 8' = ~ ~. ~ 0 o ~. ~ o ~ ' iD" o_ < o m ,.5' --. o :q ct:, O ,,--* ~ O "-' co ::q o lC') i~ :¢'0 :fO o ;!:> co V V 8' Z Z rri 0 ,,',,'4 m ,-,4 ITl ITt Z -< /i ITl · o ,,~ CD o ~ ,...q- o ~ r~ x, ~ o -- < o~ --. 0 _<. 3::,, 0 :3' 0 ::3 "0 _. m ~' ~o o ,.-,. X _,,.. _. i'-n i--t o 3 ~' c 3 <'D 3 ~ ~ × 8' 5' g - 5' '~ ~o _x. · © ..-x 0 ~.?p © 0 ~-o D P Administered by the Minnesota State Retirement System (MSRS) IYiSRS -: _z_~ .... x... ........ --....: .c: .... · :..-.;.~.,_;. : ..... _- ..- . .-..::--:,-'. 1929 - Tho Minnesota Stat¢ ~etirement S?stem (MSRS) established 1975 - MSRS authorized t'o oversee the Minnesota Defcn'cd Compensation Plan (MNOC?) 2001 - MSRS authorized to offer post retirement health care savinas plan (HCSP) ~ XTi~2~n. Stat. 352.98 (2001 Supp.) Post Retirement Health Care Savings Plan [] Elnployee (EE) can build a tax-fi'ee savings account ,,' Tax fi'ee going in ,,' Tax fi'ee o ' o ~O1Fl~ out' [] Account $ can be u'sed to offset EE and/or dependent medical expenses upon termination of employment ,~ IRS definition Tax-Free Pay Ou.~s ', -' ..7 ' .' '.' ~_ - : -~'..'-.:-': r"- .... '~'-'''~" ...... ;:: '-- - 1-. -..~Z~ .... c Health Ilasurance Premiums r- h'Iedicarc Part B (S54.00 per molatlCper person) = Dental costs = Long-telnn care premiums u Eye care costs ~ Co-payn~ents & prescription drugs ~ For other eligible expenses see IRS Publication 502 Wha Happens If'I Die? [] If You die, your spouse and dependents continue to use the account tax-fl'ee ~ If you have no dependents, the account balance will be paid out to your designated beneficiary ~ Becomes a laxab]e e~'ent How Do You Start Account? ?v~ust be ba~'gaincd for employees . Must be included in personnel po]icy for Cannot be individual choice; everyone in bargaini~tg unit or covered under personnel po]icy must participate as set out in Creatin~ Eligibility Criteria n Vesting requirement [] Hire/start dates · " Employees hired on or after 7/1/2002 ta Years of service' ? / Employees with 5-10 contribute .5°,4 of pay; 11- 15 contribute 1% 'of pay; 16 or more contribute ~" Sex'emnce eligible employees with 20 years of ~_c~x~cc will put 100 of severance in the HCSP Funding Sources Eli~oible Fu~din~ Sources Employer paid contributions = Mandaled employee contributions Ineligible Fundin~o Source Voluntary employee contributions Examples of Eligible Funding Sources '*":*'- '- *' · 1';':'~';--:*:'~":L'"'r'*~-r: ~"-"~**~-~,:'-'**'-'7~"*'-'~-'.~**-:-'~ ;~,: -m' '.' -* .:~_? .'_ *.. ~..?Z~.'_7,~ ':*-.~ .; ~:~.~-''--:.;.*t'*.'.:..*~, Severance Pay ,,' Unused sick and/or vacation Designated percentage of pay or pay increase Lump sum contribution Ongoi~g annual al~d,/or sick ]ea~'e hours- based upon an account balance Severance Pay Conversion ]Txalnple' ('385 hrs) 50% cash--50% HCSP Employee Saves Cash paS'out (tn×ed' Fed. State, FICA) 192.50 hours X 520.00 ]'IOLIi'iV rate 53850.00 gross - .40 (~0% tax deduction') S15-10.O0 $ paid in taxes $'~310.00 Net $ in cash Con','ert to ItCSP (ta×-fl'ee) 192.50 hours x 520.00 hourly rate $3850.00 gross - 0.00 (tax-free) 0.00 $ paid in taxes 53850.00 Net $ to HCSP ~'!!C.-'~.-Fcj,..-.'!.-:u:..:::cu(-, ..... ::'u:!ons. Act(Soc. Sec.~3.2e[,-Xlcdicare ' ' ' · .~-, ..Severance Pay Conversion Example: (385 hrs) 50% cash--50% HCSP . :_: · -:~. ,:~ .'?_~*~,~;-.11,7~.~. ,?-r-.2.-_.~-; .-~?.,-~2~,_--.~..--~.~_&,.:~.,_,1:~1:;;.:~-,_-,.2,.~ Employer Saves Cash payout Convert to ItCSP (taxed: Fed, Slate, FICA*) (tax-fl'ce) 53850.00 gross x .0765 1'7.65q-; FICA) 5294.52 F_n~lqoycr-paid ]:ICA -, q So$~0.00 gross 0.00 (no FICA) 0.00 Employer-paid FICA · ' FiC..'..: I-c~',v:,:: l::>t::':x::cc C~mtribufion~ .-\ct t$oc. Sec. 6..=.'~°'o - Nlcdicarc 1.45r:o)" I . vestmen_t [nformation Inx;cs[~e~t choices offered bs' the State Board of Inx;estment (SBI) New Accounts default to the money market option until investment selections are made EE makes investment choices ,' Inx'estment returns are added to or subtracted fi-om the account (earnings are tax-fi'ee) Investment Information (cont.) ';' ' '.:.' ~.~'~ t.z,.~,.~t:,_~;?~ :~.,: .~ ..z.-~.;::,:.~.,:.-_.~,:.~.~,~-~.:.~;,,...t.~7.,_?~::~:.:r_,.;,~.~:.,' ~ ~ You can change your investment options OllCe a n2onth You wi]] receive account a Tou cal~ <~o on-]il2e and x'iew 5;our account as ofle~ as you like · 7.- -_:-..- · : - -. ':. ' ' '-'" :. · · 7 -.. _ :- . ... :. . .... :-- ~ F~xed Interest = BondAccount = Income Share Account (60% siock. 35% bonds: 5% cash) ~ Stock Index Account ~ Groxx'tl~ S~ock Account Fees '~ Administrative Fee ~ An annual fee of.60% will be charged to EE account ~ The annual fee is capped at $140 per year Fundin~ Admin. Fee Cos~ ~o EE S ] 0.000 x .0060 = 560 per year I~x'est~e~t Fee -- SBI's annual ~nx'es~ment Fees range fi'om .01% \,Vl~e~ ca~ Members Draw F~'om Their Account? ' ' - '"' ' · :~ .- : z --:.. - . r '. U10o~ ~'e~irement if you are collecting a disability If you are on a medical leave (6 months or longer) If you are on a leave of absence (one year or longer) Payout Process [] Out-of-pocket ex?enses paid out weekly ~ Insurance toremiu~ns will be paid .. In March 2002, xx'c filed a toque t w/th thc IRS fora ruling s, that would alloxx the MSRS to exempt individuals who can prove that they have substantial health care coverage after retirement ~ Yri-Care c]i~ib]e employees ~iSRS receix'ed its fax'orable ruling fi'om IRS i~ Ju]x, 2002.