06/30/1997-FISCAL AUDITS - Laserfiche WebLink

Home Browse Search

r 15. Deferred Compensation Plan ' The Town offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available r to all employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. rThe Town funds all amounts of compensation deferred under the Plan, at the direction of the covered employee, through investments underwritten rby the ITT Hartford Group. r All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Town, subject only to the claims of the Town 's general creditors. Participants' rights under the plan are equal to those of general creditors of the Town in an amount equal to the fair market value of the deferred account for each participant. On August 20, 1996, the Small Business Reform Act changed Section 457 to r require that all assets of a plan be held in a trust for the exclusive benefit of participants and their beneficiaries, thus eliminating the ability of the Town's creditors to obtain funds from the plan. rThe Town has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Town r believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. r16. Post-Retirement Health Care and Life Insurance Benefits rThe Town's employee contracts provide for health care and life insurance benefits to retirees, their dependent, or their survivors. These benefits are provided through the Town's group plans. The cost of these benefits are included in the total cost of benefits for both active and retired employees. The number of participants currently eligible to receive benefits, and cost of r benefits for retirees, their dependents, or their survivors for the year ended June 30, 1997 was not available. 1 r 19