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Home My WebLink About6.g. Transfer-Loan - Flexible Spending Account E X E C U T I V E S U M M A R Y City Council Meeting Date: January 5, 2021 AGENDA ITEM: Transfer/Loan – Flexible Spending Account AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGENDA NO. 6.g. ATTACHMENTS: None APPROVED BY: LJM RECOMMENDED ACTION: Motion to approve a transfer of $43,350.00 from the General Fund to the Flexible Spending Account on a temporary basis, to be paid back through employee withholdings as the withholdings occur . BACKGROUND The City must fund the Flexible Spending Account at the beginning of each 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. Specifically, this is a request for funds to be paid to the Flexible Spending Account for the City of Rosemount employees for the plan year 1/1/21 to 12/31/21. These funds will be used to cover potential overages in that account. Federal law requires that 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 bee n 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 2020 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 han dled 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 well in handling the Flex Account. RECOMMENDATION Staff recommends the above motion.