RES 89334 - Laserfiche WebLink

June 27, 1989 Mr. Lawrence H. Miller Director of Personnel City of Pleasanton 123 Main Street P.O. Box 520 Pleasanton, CA 94566 IRC Section 89 Compliance Dear Larry, I appreciate the opportunity to provide you with our proposal to assist the City of Pleasanton (the City) in achieving compliance with the qualification rules under IRC Section 89. As a law fn'm practicing solely in the field of employee benefits, we are uniquely qualified to assist the City in this matter. Section 89 Qualification Requirements As you know, Internal Revenue Code Section 89, states five requirements the City must meet to assure that the benefits it provides to its employees are provided on a tax favored basis. Briefly these requirements are as follows: 1. the plans must be in writing; 2. the plans must be reasonably communicated; 3. the City must intend them to be permanent; 4. the plans must be for the exclusive benefit of the City's employees and their dependents; 5. the plans must be legally enforceable. The law also requires that the plans be communicated to the employees in a unified wrap- around document. If these requirements are not met, employees who participate in-the plan will be required to include in income the full cost of the employer provided benefits. Proposed legislation would change this penalty to an excise tax payable by the employer. Under present law, the City must be in compliance under items 1,2, and 3 as of October 1, 1989 and items 4 and 5 and the wrap-around document as of the first day of the City's 1990 plan year.