HomeMy WebLinkAbout6.h. TransferLoan – Flexible Spending Account
EXECUTIVE SUMMARY
City Council Meeting Date: January 7, 2020
AGENDA ITEM: Transfer/Loan – Flexible Spending
Account
AGENDA SECTION:
Consent
PREPARED BY: Jeff May, Finance Director AGENDA NO. 6.h.
ATTACHMENTS: None APPROVED BY: LJM
RECOMMENDED ACTION: Motion to approve a transfer of $51,010.00 from the General
Fund to the Flexible Spending Account on a temporary basis, to be paid back through
employee withholdings as the withholdings occur.
ISSUE
The City must fund the Flexible Spending Account at the beginning of the plan year to ensure that as
draws occur that there are funds to cover those draws. This funding is done on a short-term basis and is
repaid with employee withholdings during the year.
BACKGROUND
The Council is asked to consider a request for funds to be paid to the Flexible Spending Account for the
City of Rosemount employees for the plan year 1/1/20 to 12/31/20. These funds will be used to cover
potential overages in that account. Federal law requires the employer set aside a sufficient amount of
dollars to cover all claimed expenses throughout the plan year, even though the amounts may not have
been withheld from an employee at the time that the claims are made.
The amount being requested is the total amount that will be required to cover all deposits made by
employees during the upcoming plan year. Any additional amounts to cover the 2019 final year-end
adjustment necessary to balance out the account for the calendar year (to cover the new hires and
employees who left the City) will be administered internally as our year-end process is completed. Also,
any new hires and terminations will be handled internally during the year to cover any potential over or
under coverages as they occur. As we have done in the past, when the money is withheld from the
employee’s payroll checks it will be deposited into the General Checking Account to reimburse that
account for the funds that were advanced to the Flexible Spending Checking Account.
The City has done this since 1990 and the process has worked very well in handling the Flex Account.
RECOMMENDATION
Staff recommends Council approval of the above motion.