2002-01-23 CC Packet - Laserfiche WebLink

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.~ c, en:terville )):'~' ,'~'" ~,H,tf;;i'''''~-' {_E~.ta b{ l~,h ed MEMO DATE: January 23, 2002 TO: Mayor and Council FROM: I/i,. Kim Moore-Sykes, City Administrator ? I,U>: RE: Deferred Compensation Report from Abdo, Eick & Meyer I~...~...................................................................... On October 24, 200 I, the accounting firm of Abdo, Eick and Meyer was contacted and asked to do an audit of the City's Deferred Compensation Plan from 1996 through October 2001. Steve McDonald, Abdo, Eick and Meyer, recently contacted Staff to report that the audit of the City's Deferred Compensation Plan is completed. A copy of that report has been received by the City and has been distributed to the City Council. Mr. McDonald found two issues as the result of the audit that requires Council action. The first issue is that FICA and Medicare was not deducted from the City's contribution to participating employees' deferred compensation. These errors occurred because of a misunderstanding about what the requirements were regarding deducting FICA and Medicare from this benefit. The City will be required to remit this shortage to FICA and Medicare. In addition, Mr. McDonald reported that participating employees' W-2's will need to be amended. Because many of the employees that participated in the City's deferred compensation plan from 1996 to 2001 are no longer employed with the City, iVlr. McDonald is advising that the City pay both sides of the withholding as soon as possible so that it can be reflected li, the first qt:.arter of2002. The last issue may require the City to convert its contribution to the State plan. The issue is whether or not the deferred compensation in lieu of health benefits is regulated by Minnesota Statute Section 356.24 and ifso, what correction is required. Mr. McDonald's recommendation is to contact the Attorney General's office for an opinion. Recommendation: L Direct Staff to amend affected W-2's tor each year from 1996 to 2001, paying both sides of the withholding in the amount of$5,954.32; and 2. Seek the Attorney General's opinion regarding the application afthe Minnesota Statute Section 356.24.