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City of Lino Lakes, Minnesota <br />Management Report <br />Governmental Accounting Standards Update <br />In 1996, Congress adopted law changes to the provisions of Internal Revenue Code Section <br />457. Under the current law, 457 assets were to remain solely the property of the employer, <br />subject to the claims of the employer's general creditors. With the new law change, all amounts <br />deferred under a Section 457 plan must be held in trust for the exclusive benefit of plan <br />participants and/or beneficiaries. <br />As a result of the new law change, 457 assets are no longer the sole property of the <br />employer or subject to the claims of the employer's general creditors. Therefore, GASB <br />Statement No. 2 no longer applies, and 457 assets will no longer be required to be included in the <br />City's Annual Financial Report. <br />The City's deferred compensation plans were amended during 1997 to comply with the <br />1996 law changes. The Deferred Compensation Agency Fund was therefore closed during 1997. <br />Page 71 <br />