APPENDIX I
SAMPLE DEPENDENT CARE ASSISTANCE PLAN DOCUMENT
UNDER SEC. 129 of INTERNAL REVENUE CODE
ARTICLE 1 - PURPOSE OF THE PLAN
1.1. (AGENCY) establishes this Plan under Public Law 107-67, Section
630, to subsidize a portion of the cost of child care incurred by (AGENCY)’s
employees.
1.2. (AGENCY) also intends that the Plan qualify as a plan providing
dependent care assistance under Internal Revenue Code (Code) Section
129. Only the subsidies provided under the Plan for Eligible Child Care
Expenses on behalf of a Qualifying Child who is also a Qualifying Dependent
will be eligible for exclusion from the Participant’s gross income under
Code Section 129(a). Subsidies disbursed on behalf of a Qualifying Child
who is not also a Qualifying Dependent must be included in the Participant’s
gross income.
ARTICLE 2 - DEFINITIONS
2.1. "Benefits" means the amounts paid to Participants under
the Plan to subsidize Eligible Child Care Expenses paid or incurred
by the Participant.
2.2. "Child" means a member of a household maintained by an
Employee who bears the following relationship to the Employee:
- a biological child who lives with the Employee;
- an adopted child;
- a stepchild;
- a foster child;
- a child for whom a judicial determination of support has been obtained;
or
- a child to whose support the Employee who is a parent or legal guardian
makes regular and substantial contributions.
2.3. "Code" means the Internal Revenue Code of 1986, as amended.
2.4. "Dependent" means any individual who is a dependent of
a Participant within the meaning of Code Section 152(a).
2.5. "Earned Income" means all income, as defined under Code
Section 32(c)(2), including income from wages, salaries, tips and other
employee compensation, and net earnings from self-employment, but does
not include any amounts received: (i) as pre-tax benefits under Code
Section 129 on behalf of a Qualifying Dependent under the Plan or any
other dependent care assistance program; (ii) as a pension or annuity;
or (iii) as unemployment or workers’ compensation.
2.6. "Educational Institution" means any college or university,
the primary function of which is the presentation of formal instruction
and that normally maintains a regular faculty and curriculum and normally
has a regularly enrolled body of students in attendance at the place
where its educational activities are regularly carried on.
2.7. "Effective Date" means (date selected for start of program).
2.8. "Eligible Child Care Expenses" means expenses incurred
by a Participant for Qualifying Services which are paid to a Qualifying
Provider who is not: (i) a Dependent of a Participant or a Dependent
of the Spouse of a Participant, (ii) a child of a Participant under
the age of 19, and which are incurred to enable the Participant or the
Participant's Spouse to be gainfully employed.
2.9. "Eligible Employee" means an individual employed on a full
time basis by (AGENCY).
2.10. "Employee" means an employee of (AGENCY).
2.11. "Highly Compensated Employee" means any person who is
a highly compensated employee as defined in Code Section 414(q).
2.12. "Maintaining a Household" means that an Employee or, if
married, an Employee and Spouse together furnish over one half the cost
of maintaining a household.
2.13. "(AGENCY)" means (full name of agency if acronym/abbreviation
used throughout document).
2.14. "Participant" means any Employee who has satisfied the
eligibility requirements of Section 3.1, who has made application and
been accepted by (AGENCY) for benefits under this Plan.
2.15. "Plan" means the (AGENCY) Child Care Subsidy Plan.
2.16. "Plan Administrator" means (AGENCY).
2.17. "Plan Year" means the 12-month period commencing on January
1 and ending on December 31.
2.18. "Qualifying Child" means a Child of a Participant who
is: (a) under the age of 13; or (b) under age 18 and is physically or
mentally incapable of caring for himself or herself.
2.19. "Qualifying Day Care Center" means a day care center,
as described in Code Section 21 and regulations there under, that (i)
complies with all applicable laws and regulations of the State and town,
city or village in which it is located, (ii) is licensed to provide
day care services in the state or location in which the day care center
operates, (iii) provides care for more than six individuals (other than
individuals who reside at the day care center) and (iv) receives a fee,
payment or grant for services for any of the individuals to whom it
provides services (regardless of whether the facility is operated for
a profit).
2.20. "Qualifying Dependent" means: (i) a Dependent of a Participant
who is under the age of 13; or (ii) a Dependent of a Participant who
is under the age of 18 and who is physically or mentally incapable of
caring for himself or herself.
2.21. "Qualifying Provider" means an individual or a Qualifying
Day Care Center licensed to provide child care services in the state
or location in which they operate.
2.22. "Qualifying Services" means services performed:
- in the home of the Participant, or outside the home of the Participant,
or at a Qualifying Day Care Center, or licensed Family Day Care Home
- for the care of a Qualifying Child or Qualifying Dependent of the
Participant;
- to enable the Participant or the Participant’s Spouse to remain
gainfully employed; and
- for the primary purpose of assuring the Qualifying Child's or Qualifying
Dependent's well being and protection
Qualifying Services do not include services provided at a camp where
the Qualifying Child or Qualifying Dependent stays overnight.
2.23. "Spouse" means the husband or wife of a Participant but
does not include an individual legally separated from a Participant
under a decree of legal separation.
2.24. "Student" means an individual who during each of five
calendar months during a Plan Year is a full time student at an Educational
Institution.
ARTICLE 3 - ELIGIBILITY AND PARTICIPATION
3.1. An Employee is eligible for this Plan immediately upon becoming
an Eligible Employee.
3.2. An Eligible Employee will become a Participant in the Plan
upon application for Benefits to and approval by (AGENCY).
3.3. If a Participant ceases to be an Eligible Employee, he or she
will no longer be eligible to receive Benefits under the Plan. If the
Employee again becomes an Eligible Employee, he or she may again become
a Participant in the Plan.
ARTICLE 4 - BENEFITS
4.1. A Participant in the Plan will be eligible to receive Benefits
under the Plan for all Eligible Child Care Expenses incurred by the
Participant or his or her Spouse subject to the limitations of Article
6.
4.2. Benefit Amounts.
- Benefits will be provided as a percentage of the Eligible Child
Care Expenses according to a schedule based on the Participant’s total
family income.
- The current schedule of benefits is shown as Attachment A to this
Plan (agency should include...)
- (AGENCY) may adjust the schedule in Attachment A from time to time
based on the availability of funding for the program and to maintain
an equitable distribution of benefits for all Eligible Employees.
- (AGENCY) will sign a new Attachment A noting the effective date
and provisions of the adjusted Benefits under the Plan and the new
Attachment A will become a part of this Plan.
4.3. A Participant will be entitled to Benefits under this Plan
only for Eligible Child Care Expenses incurred after the later of: (a)
the date he or she becomes a Participant in the Plan; or (b) the Effective
Date of the Plan.
4.4. Each Participant who desires to receive a Benefit under the
Plan for Eligible Child Care Expenses incurred by the Employee for Qualifying
Services must submit to the Plan Administrator, on a form to be provided
by (AGENCY), a statement containing the following information:
- Name, home address and employment information for each of the child’s
parents;
- Name, date of birth, child care enrollment information and weekly
cost for each Child to be covered;
- Gross annual salaries of the father, mother and/or guardian, as
appropriate, and total gross family income as reported on the most
recent Federal income tax return;
- Amount and source of any other state, county or local child care
subsidies;
- Completed and signed child care provider information form, along
with proof of the Provider’s licensure and the Provider's Federal
tax identification number; and
- Such other information or documents as (AGENCY) may require to administer
the Plan.
4.5. Following receipt of the information required in Section 4.4,
the Plan Administrator will notify the Participant whether he or she
is eligible to receive Benefits under the Plan.
4.6. Approval for and payment of Benefits will be subject to the
availability of appropriated funds.
4.7. If a Participant ceases to be an Eligible Employee:
- no Benefits will be paid for Eligible Child Care Expenses incurred
after the date the Participant ceases to be an Eligible Employee;
and
- unless the Participant was discharged from employment for cause,
requests for Benefits may be made after the date of termination for
Eligible Child Care Expenses incurred prior to the date of termination.
4.8. The Participant is responsible for notifying (AGENCY) immediately
of any change to information submitted for the purpose of qualifying
for Benefits under this Plan.
ARTICLE 5 - AUTHORIZATION AND PAYMENT OF BENEFITS
5.1. At the end of each calendar month, the Plan Administrator will
send an invoice approval form to the Qualifying Provider named by the
Participant on his or her Benefits application.
5.2. The Qualifying Provider will certify on the invoice approval
form that the Qualifying Services for that billing period were actually
performed on behalf of the Participant’s Qualifying Child.
5.3. The Participant will certify on the invoice approval form that
the Qualifying Services for that billing period were in fact received
by the Participant’s Qualifying Child.
5.4. The Qualifying Provider will then submit the completed invoice
approval form to the Plan Administrator for review and payment.
5.5. The Plan Administrator will review the submitted invoice approval
form and pay the Benefit amount directly to the Qualifying Provider.
ARTICLE 6 - LIMITATIONS ON BENEFITS
6.1. The following amounts will not be subject to exclusion from
the Participant’s gross income:
- benefits payable for Eligible Child Care Expenses on behalf of a
Qualifying Child who is not a Qualifying Dependent; or
- benefits payable for Eligible Child Care Expenses that exceed the
following maximum amounts for the calendar year:
- For a Participant who is not married at the close of the calendar
year, the lesser of the Participant’s Earned Income for the Plan
Year (after all reductions in compensation), or $5,000;
- For a Participant who is married at the close of the calendar
year, the least amount of the following:
- the Participant’s Earned Income for the calendar year;
- the Earned Income of the Participant’s Spouse for the calendar
year;
- $5,000, if the Participant and his or her Spouse file a
joint Federal income tax return; or
- $2,500, if the Participant and his or her Spouse file separate
Federal income tax returns.
If the foregoing amounts are changed by an amendment to Code Section
129, the amounts set forth automatically shall be adjusted to reflect
the new amounts.
6.2. For purposes of Section 6.1, a Spouse of a Participant who
is not employed during any month in which the Participant incurs Eligible
Child Care Expenses, and which Spouse is either physically or mentally
incapable of caring for himself or herself or is a Student, will be
deemed to have Earned Income for such month of:
- $200, if there is one Qualifying Dependent for whom the Participant
incurs Eligible Child Care Expenses; or
- $400, if there is more than one Qualifying Dependent for whom the
Participant incurs Eligible Child Care Expenses.
6.3. In accordance with Code Section 129(d), the average Benefits
provided to Participants who are not Highly Compensated Employees will
be at least 55% of the average Benefits provided to Highly Compensated
Employees. (AGENCY) may adjust the Benefits payable to Highly Compensated
Employees to assure that the Plan remains in compliance with this provision.
ARTICLE 7 - FUNDING
7.1. (AGENCY) will contribute the amounts required to pay Benefits
under this Plan out of appropriated funds. There will be no special fund
out of which Benefits are paid, nor will Participants be required to make
a contribution as a condition of receiving Benefits.
ARTICLE 8 - PLAN ADMINISTRATION
8.1. (AGENCY) will administer the Plan according to its terms and
subject to applicable law, for the exclusive benefit of persons entitled
to participate in the Plan, without discrimination among them. In addition
to all other powers provided by this Plan, (AGENCY) has authority to:
- Make and enforce rules and regulations as it deems necessary or proper
to efficiently administer the Plan;
- Interpret the Plan in good faith, and its interpretations will be
final and conclusive on all persons claiming benefits under the Plan;
- Decide all questions concerning the Plan and the eligibility of any
person to participate in the Plan;
- Appoint agents, counsel, accountants, consultants and other persons
as needed to help administer the Plan; and
- Allocate and delegate, in writing, its responsibilities under the
Plan and to designate other persons to carry out any of its responsibilities
under the Plan.
8.2. (AGENCY) will make available to each Eligible Employee such records
under the Plan as pertain to the Eligible Employee, by request under the
Privacy Act.
8.3. In administering the Plan, (AGENCY) will be entitled, to the
extent permitted by law, to rely conclusively on all tables, valuations,
certificates, opinions and reports that are furnished by accountants,
counsel or other experts employed or engaged by (AGENCY).
8.4. Whenever, in the administration of the Plan, any discretionary
action by (AGENCY) is required, (AGENCY) will exercise its authority in
a nondiscriminatory manner so that all persons similarly situated will
receive substantially the same treatment.
8.5. The Plan Administrator will provide to each Participant receiving
Benefits under the Plan during the Plan Year a statement of the amount
of Benefits received by the Participant during that Plan Year. This statement
will be furnished to the Participant by January 31st following
the end of the Plan Year. The amount of dependent care subsidies provided
to the Employee will be reported on the Employee's Form W-2.
ARTICLE 9 - CLAIMS PROCEDURE
9.1. A Participant may make a claim for Benefits by completing the
invoice approval form in conjunction with the Qualified Provider, as described
in Article 5.
9.2. If a claim is wholly or partially denied, notice of the decision
will be furnished to the Participant and to the Qualifying Provider within
a reasonable period of time, not to exceed 90 days after receipt of the
claim by the Plan Administrator, unless special circumstances require
an extension of time for processing the claim. If an extension of time
is required to make a decision, the Plan Administrator will notify the
Participant prior to the end of the initial 90-day period. The extension
may not exceed 90 days from the end of the initial period. The notification
will include:
- the specific reason(s) for the denial;
- a description of any additional information necessary to make a decision;
and
- an explanation of the Plan’s claims review procedure, as described
in Section 9.3.
9.3. If a claim is denied, the Participant may request in writing
that the Plan Administrator review the claim. Upon receipt of a request
for review, the Plan Administrator will review the decision and respond
to the Participant within 60 days of receipt of the written request. If
the Plan Administrator affirms the original denial of the claim, the Participant
may invoke the applicable grievance procedure, either:
- the negotiated grievance procedure outlined in the collective bargaining
agreement between (AGENCY) and the union; or
- the administrative grievance procedure contained in the (AGENCY) Human
Resource Handbook, as currently in effect.
9.4. If a dispute arises on any matter under this Plan, the Plan Administrator
may refrain from taking any other or further action in connection with
the matter involved in the controversy until the dispute has been resolved.
ARTICLE 10 - AMENDMENT AND TERMINATION OF PLAN
10.1. (AGENCY) may amend or terminate this Plan at any time. The benefits
hereunder are not guaranteed and may be reduced by plan amendment.
10.2. This Plan will not terminate unless appropriated funds are no
longer available.
ARTICLE 11 - MISCELLANEOUS PROVISIONS
11.1. This Plan and the benefits it offers do not provide any additional
rights to Participants or Employees other than those expressly set forth
herein.
11.2. This Plan will be construed, administered and enforced according
to the laws of the United States of America.
Adopted as of the Effective Date by:
AGENCY
By: _______________________ (Director) Date:_____________
(AGENCY) CHILD CARE SUBSIDYASSISTANCE PLAN
ATTACHMENT A
BENEFIT SCHEDULE
Effective as of the date stated below, the following Benefit schedule
will be in effect under Section 4.2 of the Plan:
| Over $47,000 |
0% |
| $42,000 - $47,000 |
5% |
| $37,000 - $41,999 |
10% |
| $32,000 - $36,999 |
15% |
| $27,000 - $31,999 |
20% |
| $22,000 - $26,999 |
25% |
| $21,999 or less |
30% |
1 Total Family Income refers to line 22 on Internal Revenue
Service (IRS) Tax Return Form 1040 or line 15 on IRS Tax Return Form 1040A.
2 A Participant’s Benefits under this Plan will be reduced
by the amount of other state or local child care subsidies received by
the Participant.
Adopted as of the Effective Date by:
AGENCY
By: _______________________ (Director) Date:_____________
Incremental change effective (date) approved by Director
| Over $52,000 |
0% |
| $47,001 - $52,000 |
20% |
| $32,000 - $47,000 |
30% |
| $31,999 or less |
50% |
U.S. Office of Personnel Management 1900 E Street NW, Washington, DC 20415 | (202) 606-1800 | TTY (202) 606-2532