CCP 12-13-2004 - Laserfiche WebLink

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Citv of Arden Hills Summary Plan Description Note - If you receive nontaxable reimbursement from the Plan for health care or dependent care . expenses, you may not deduct or take a credit for these expenses on your tax return. SPECIAL NOTICE CONCERNING DEPENDENT CARE EXPENSES Under current law, a tax credit is available for the same type of dependent care expenses that are eligible for reimbursement through the Plan. The amount of the credit depends on the taxpayer's adjusted gross income and ranges from 20% to 35% of eligible expenses up to a limit of $3,000 of expenses if there is one eligible Dependent and $6,000 of expenses if there are two or more eligible dependents. As indicated above, however, you will not be eligible to take the tax credit for any expenses reimbursed through the Plan. In addition, the maximum amount of expenses eligible for the credit will be reduced on a dollar-for-dollar basis for each dollar of dependent care reimbursements you receive under the Plan. For example, if you have two children and incur $5,000 of dependent care expenses in 2005, $2,000 of which is reimbursed through the Plan, the maximum amount of your expenses eligible for the credit would be $4,000 ($6,000 less $2,000). Determining whether taking the credit or reimbursement under the Plan is more beneficial involves complex calculations. Because each individual's situation is different, the Employer cannot predict whether or not it would be more beneficial to you to take the tax credit for dependent care expenses or to have your expenses reimbursed under the Plan. EARNED INCOME CREDIT Under federal law, an earned income credit is available for individuals with lower incomes. The amount of the credit differs depending on whether or not an individual has children, and is phased out as income increases. Participation in the Plan may affect your eligibility for the eamed income credit and/or the amount of the credit. You should consult your tax relurn instructions and/or your tax advisor to determine whether this credit applies to you and if so, the impact of participating in this Plan. . WHAT EFFECT DOES THE PLAN IlA VE ON SOCIAL SECURITY OR OTHER GOVERNMENT BENEFITS? If you use your Pre-tax Contributions for nontaxable benefits from the Plan, the amount of social security benefits and other government provided, pay-related benefits for which you later may be eligible may be reduced. For example, if you earn less than the social security wage base, which is $90,600 for the 1.45% Medicare portion), and you use your Pre-tax Contributions to obtain'nont will have lo;.ver earnings for social security purposes, and retirement apd oth~r - earnings could also be reduced. . , ,imited for nefits, you based on, thesl' WHAT EFFECT DOES THE PLAN HAVE ON OTHER PAY-RELATED BENEFITS? Your use of Pre-tax Contributions for nontaxable benefits from Ihe Plan should not affect your benefits from other pay-related benefit plans under other Employer-sponsored plans. All benefits from thl'se pay- related benefit plans, such as Long-Term Disability Insurance, are based on your gross pay without regard to any salary conversion amounts undcr this Plan. For purposes of Section 457 Deferred Compensation Plans and PERA, compensation is based on gross salary compensation before Pre-tax Contributions under this Plan. Monthly Employer Contributions used to purchase mandatory insurance . benefits under the Plan should not be included in Ihe calculations of your compensation. SPD-12