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07. Resolution 4948 - Adopting ICMA Medical Savings Retirement Planffi C-1 ty of Kalispell Post: fffic� uxx 1997Kai i::p 1i, ,)riy�,,rya 990? -1997 -Tel phone (4 6)7h8_7700 Fax (40)7-5'8-7758 REPORT TO: Mayor Kennedy and City Council FROM: Array Robertson. Finance Director SUBJECT: ICMA -RETIREMENT HEALTH SAVINGS PLAN MEETING DATE: November 1, 2004 BACKGROUND- We currently have ICMA accounts for 457 Deferred Compensation and 401 plans (Manager's retirement). We are asking to enter into an agreement with ICMA to offer the Retirement Health Savings Plan for our employees. This plan allows employees to roll vacation and sick leave severance into the plan (like a flex plan) with no FICA taxes or Federal Income taxes paid ever. Withdrawals from the plan are used to pay health insurance premiums and medical costs similar to a flex plan. The: benefit to the city is that the city does not have to pay the matching FICA taxes. Plan fees are paid by the owner of the plan (employee). The plan is totally optional on the part of the employee. Most employees will elect to join the plan the year before: their retirement. There is an annual opera enrollment period. Paying health insurance premiums is the biggest obstacle to retirement for many. This program should also encourage employees to conserve their sick leave knowing that they can receive the payout tax free. The city's retirement payout remains at 25%. RECOMMENDATION: FISCAL EFFECTS: ALTERNATIVES: Amy H. Robertson Finance Director Adopt Resolution Savings will. vary, matching FICA amounts. As suggested by Council. Report compiled: October 26, 2004 Frank Garner Interim City Manager RESOLUTION NO.4948 A RESOLUTION AUTHORIZING PARTICIPATION IN THE INTERNATIONAL CITY MANAGER ASSOCIATION (ICMA) VANTAGECARE RETIREMENT HEALTH SAVINGS (RHS) PROGRAM AND AUTHORIZING SUCH DOCUMENTS AS MAY BE NECESSARY TO EFFECTUATE PARTICIPATION IN SUCH EMPLOYEE BENEFITS PROGRAM. WHEREAS, the City of Kalispell (the "Employer") has employees rendering valuable services; and WHEREAS, the establishment of a retiree health savings plan for such employees serves the interests of the Employer by enabling it to provide reasonable security regarding such employees' health needs during retirement, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and WHEREAS, the Employer has determined that the establishment of the retiree health savings plan (the "Plan") serves the above objectives. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION L That the City of Kalispell does hereby adopt the Plan in the form of the ICMA Retirement Corporation's VantageCare Retirement Health Savings program. SECTION II. That the assets of the Plan shall be held in trust, with the Employer serving as trustee, for the exclusive benefit of flan participants and their beneficiaries, and the assets of the Plan shall not be diverted for any other purpose prior to the satisfaction of all liabilities of the Plan. The Employer has executed the Declaration of Trust of the City of Kalispell Integral Part Trust. SECTION IZI. That the Personnel Specialist shall be the coordinator and contact for the Plan and shall receive necessary reports, notices, etc. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS I ST DAY OF NOVEMBER, 2004. Pamela B. Kennedy Mayor ATTEST: Theresa White City Clerk