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DATE: 08/19/2026
TO: Honorable Mayor and City Council Members
FROM: Human Resources Department
2026-299
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
RESOLUTION ADOPTING THE CITY OF CORONA RESTATED SECTION 125
CAFETERIA PLAN
EXECUTIVE SUMMARY:
This staff report asks the City Council to consider the adoption of Resolution No. 2026- 091, which adopts the City of Corona Restated Section 125 Cafeteria Plan. The Restated Section 125 Cafeteria Plan is being amended to delete obsolete provisions and to make it consistent with federal law, the City’s current practices, and the benefits provided to employees under the various labor bargaining agreements and benefit resolutions for unrepresented employees. The Restated Section 125 Cafeteria Plan would also allow employees to carryover a capped amount (currently $680) of unused health flexible spending account funds into the next plan year.
RECOMMENDED ACTION:
That the City Council approve Resolution No. 2026-091, adopting the City of Corona Restated Section 125 Cafeteria Plan and repealing Resolution No. 2009-123.
BACKGROUND & HISTORY:
A Section 125 plan is a written, employer-sponsored plan that allows employees to choose among two or more benefits. A Section 125 plan is a flexible, tax-advantaged way for employees to receive benefits while lowering taxable income. It benefits both JAMIER\09000.25600\10328865.1
employees and employers by providing pre-tax options for health insurance premiums, dependent care, and other qualified benefits. Employees can elect to have money deducted from their gross pay to pay for qualified benefits such as health insurance premiums, health flexible spending accounts, and dependent care flexible spending accounts.
The City adopted the City of Corona Section 125 Cafeteria Plan (Plan) in November 1998.
The Plan was most recently updated in 2009 with the adoption of Resolution No. 2009- 123.
ANALYSIS:
In preparation for employee benefit administration for calendar year 2027, the Plan was comprehensively reviewed by City staff and legal counsel. The Plan has been amended to be consistent with current federal law, to better reflect the City’s practices in administering the Plan, and to maintain consistency with current labor agreements and benefit resolutions.
The Plan has also been amended to revise the options available to employees for any unused funds remaining in an employee’s health care flexible spending account at the end of the Plan year. Currently, the Plan provides a 3-month grace period after the Plan year ends, to incur and submit claims for eligible health expenses from that year and still be reimbursed. City staff is proposing to amend the Plan to eliminate the grace period and instead permit employees to carryover, or rollover, a capped amount of unused funds into the next Plan year. The carryover amount is established by the Internal Revenue Service (IRS) each year, which in 2026, amounts to $680. Employees will still be able to elect the full annual maximum for the next Plan year and stack it with the carryover amount. It should be noted that under IRS rules, this carryover option is not available for dependent care flexible savings accounts, so the grace period will remain in the Plan for such accounts.
FINANCIAL IMPACT:
There is no financial impact associated with the approval of the recommended actions, as the amendments update the City’s Section 125 Cafeteria plan to align with current requirements and practices.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action involves the amendment and adoption of a Section 125 Cafeteria Plan, which will not have any effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: JAMIE RAYMOND, ASSISTANT CITY ATTORNEY
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REVIEWED BY: MARCUS RIDLEY, DEPUTY CHIEF TALENT OFFICER ATTACHMENTS:
1. Exhibit 1 – Resolution 2026-091 Adopting the City of Corona Restated Section 125 Cafeteria Plan
2. Exhibit 2 - City of Corona Restated Section 125 Cafeteria Plan (Redline)