The City of Lakeland has been advised by ICMA that they have reached an agreement with the IRS regarding their legal challenge to these plans.

Employee RHS accounts that are in place as of December 31, 2006 will retain the tax exempt status for all past employee compensation deposited into the account and for all payroll future contributions until December 31, 2007.

The IRS will make no effort to apply federal income taxes to contributions made into the plan.

Active employees who are currently enrolled in the RHS plan will continue their tax-exempt payroll contributions into the plan – including amounts to be contributed to the plan from final payout of unused sick, vacation, etc. – until December 31, 2007.

If an employee is not currently enrolled, no new enrollment will be permitted and there will be no open enrollment this October.

As of December 31, 2007, the IRS will allow no more contributions to the plan.

This restriction includes prohibition on contributions to the plan funded from any final payout of unused sick, vacation, etc. that occurs after December 31, 2007.

All payroll deductions into the plan will cease on December 31, 2007 and final payout of unused sick, vacation, etc. that occurs after that date, even if you are currently a member, cannot be deposited into these accounts.

Currently the City has no intention of continuing this Plan in another format.