Title
a. Approve and adopt Amendment No. 2 to the County of Monterey Section 125 Flexible Benefit Plan to increase the Dependent Care Assistance Program contribution limit effective January 1, 2026 from $5,000 to a flexible contribution limits as set by Congress or the Internal Revenue Service effective January 1, 2026.
b. Authorize the Human Resources Department and the Auditor-Controller’s Office to implement the amendment to the Monterey County Section 125 Flexible Benefit Plan.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Approve and adopt Amendment No. 2 to the County of Monterey Section 125 Flexible Benefit Plan to increase the Dependent Care Assistance Program contribution limit effective January 1, 2026 from $5,000 to a flexible contribution limits as set by Congress or the Internal Revenue Service effective January 1, 2026.
b. Authorize the Human Resources Department and the Auditor-Controller’s Office to implement the amendment to the Monterey County Section 125 Flexible Benefit Plan.
SUMMARY:
The County of Monterey offers all eligible County employees a robust pre-tax benefits package through Cafeteria Benefit Plan, which includes a Dependent Care Assistance Program (DCAP). The Dependent Care Assistance Program allows employees to make an irrevocable election each Open Enrollment Period to set aside pre-tax dollars for the upcoming calendar year to pay for eligible dependent care expenses such as daycare, afterschool program, and summer day camp. Historically, the annual DCAP contribution limit has been set at $5,000 per household, as established under Internal Revenue Code (IRC) Section 129.
On July 4, 2025, the H.R.1 Bill was enacted by Congress, which increases the maximum annual contribution limit for the Dependent Care Assistance Program (DCAP) from $5,000 to $7,500, effective January 1, 2026. In order for the County to offer this increased benefit to employees, the County’s Section 125 Cafeteria Plan must be form...
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