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Consent-General Government # 19.
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| Board of Supervisors |
Financial Services |
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| Subject |
| Adopt amendments to an agreement with ICMA-RC to enhance the existing deferred compensation plan. (No general fund impact) (Rinde/Pistochini) |
| Recommended Action |
- Adopt an amendment to an agreement with ICMA-RC to allow self-directed brokerage accounts within the Yolo County Deferred Compensation Plan;
- Adopt an amendment to an agreement with ICMA-RC to allow provision of a 401(a) deferred compensation account to employee bargaining groups when authorized by a labor agreement or subsequent Board action; and
- Designate the Deferred Compensation Committee to provide oversight of the 401(a) deferred compensation account and direct the Committee to propose revisions to its charter to include oversight of the 401(a) account and return the charter to the Board of Supervisors for approval.
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| Strategic Plan Goal(s) |
| Operational Excellence |
| Reason for Recommended Action/Background |
The County offers an optional deferred compensation benefit to its employees. Deferred compensation is a way for County employees to take advantage of tax deferred investment earnings for retirement purposes. The deferred compensation plan currently consists of a 457 account that is monitored by the Yolo County Deferred Compensation Committee.
Self-Directed Brokerage Accounts
After careful consideration, the Committee recommends that the County allow self-directed brokerage accounts (SDBA) to be added to the plan. This will allow County employees to opt-in to an SDBA to wield more control over their investments and access publicly traded U.S stocks, bonds and mutual funds. The SDBA will not be able to access more speculative investment options such as pink sheet trading or option trading. The County will not be responsible for an employee’s activity within the SDBA. Adopting the amendment (Attachment A) will allow County employees to take advantage of this option. Employees who are interested will be required to opt into this option and this change will not impact other employees who have selected from the previously offered investment menu.
401(a) Account
Another type of deferred compensation account is a 401(a) account. This allows certain County employee groups to take advantage of additional tax deferred account to complement the County's existing deferred compensation plan. The employee groups can opt in to this account as part of their labor agreement with the County. Offering this account provides the County with additional resources to competitively compensate their employees and allow the employee to further maximize available tax deductions for retirement saving. The 401(a) account, if adopted by this Board, will be an add-on option to the existing deferred compensation plan (Attachment B). This allows for the same service provider, ICMA-RC, to service these accounts at the same cost and offer the same investment menu as the 457 plan.
Oversight Committee
It is recommended that the Board assign the oversight and monitoring responsibility to the Deferred Compensation Committee. This recommendation will simplify plan administration and ensure a consistent approach and experience for those County employee groups that opt into both a 457 and 401(a) account.
The County’s independent deferred compensation plan advisor, Hyas Group, Inc. reviewed and concurred with these recommendations. The current 457 account service provider, ICMA-RC, is willing to service both the 457 and 401(a) account. |
| Collaborations (including Board advisory groups and external partner agencies) |
| This recommended action was developed in consultation with County Counsel, the Human Resources Department and Hyas Group, Inc. |
| Competitive Bid Process |
| ICMA-RC was selected to be the County’s sole service provider for the deferred compensation plan as a result of a competitive Request for Proposals. At that time, nine proposals were received and ICMA-RC was selected as the best evaluated proposer by the scoring committee. The contract was awarded and approved on April 25, 2018 by this Board. The cost of administration of the 401(a) account will be similar to the 457 account and is paid for as a percentage of assets under management for the record keeping services and cost of the committee oversight. |
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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Explanation (Expenditure and/or Revenue) |
| Further explanation as needed: |
| There is no fiscal impact as a result of adopting the recommended action. |
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