HomeMy WebLinkAboutAmendment to the Administrative Service Agreements with ICMA MEETING DATE: 2/22/2005 DEPARTMENT ID NUMBER:AS05-008
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Council Meeting Date: 2/22/2005 Department ID Number: AS05-008
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR/CITY COUNCIL MEMBERS
SUBMITTED BY: ROBERT BEARDSLEY, ACTING ASSISTANT CITY
ADMINISTRATOR
PREPARED BY: CHARLES THOMAS, 9ING DIRECTOR OF ADMINISTRATIVE
SERVICES
SUBJECT: APPROVE AMENDMENTS TO AGREEMENTS FOR DEFERRED
COMPENSATION PLANS
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: The City contracts with ICMA Retirement Corporation (ICMA-RC) and
Nationwide Retirement Solutions for IRS 457 Deferred Compensation Plans. The City also
has an agreement with ICMA-RC for three 401 a Money Purchase Retirement Plans. Both
companies have provided the City with amendments to the Administrative Services
Agreements to reduce the Administrative fees paid by employees. In addition, one 401a
plan, for the City Administrator is inactive.
Funding Source: Not applicable
'Recommended Action: Approve the amendments to the Administrative Services
Agreements with the ICMA Retirement Corporation for Plans Numbered 107578 (401 a for
City Administrator), 107694 (401a for appointed Department Directors), 107695 (401a for
elected Department Directors) and 301516 (457 Deferred Compensation Plan).
Approve the Amendment to the 457 Deferred Compensation Plan Administration Agreement
with Nationwide Retirement Solutions to reduce plan administration fees by fund, as
identified.
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REQUEST FOR ACTION
MEETING DATE: 2/22/2005 DEPARTMENT ID NUMSER:AS05-008
Alternative Action(s): Do not amend the contracts, The ICMA-RC contract currently
allows for termination without penalty by either party on a 60-day notice and includes
administrative fees averaging approximately $150 per employee participant annually. The
only modification to the Nationwide Retirement Solutions contract is the reduction of
administrative fees paid by employees; all other provisions remain the same.
Analysis: The City adopted an IRS Section 457 Deferred Compensation Plan in 1973 and
added a 401A Money Purchase Retirement Plan in 2000. The City currently contracts with
two organizations to provide administrative services and investments for the plans (ICMA-RC
and Nationwide Retirement Solutions.) The program is supported through a combination of
administrative fees paid by participating employees and fees received from proprietary
mutual fund accounts offered in the plans. One of the providers, the ICMA-RC has offered to
reduce employee-paid administrative fees for all plans to 0% (currently at .29%), if the City
amends the contract with the following provisions:
1. Agree to a term of five years, followed by successive 2-year terms that can only be
cancelled with written notice provided no less than 60 days before the end of each term.
This is a non-exclusive contract, allowing the City to continue to provide choice to employees
in deferred compensation plan service providers. Currently, the agreement allows for
termination without penalty by either party on a 60-day notice.
2. The City will utilize the ICMA-RC EZLink software for transmitting contributions and
reports. Through this software, the City is able to electronically transfer contributions out of
each bi-weekly payroll.
This fee reduction affects both the 457 and 401a plans. Based on current assets, the
reduction to 0% of participant-paid administrative fees represents a savings of approximately
$53,398 annually or about $150 for the average participant each year.
The Nationwide Retirement Solutions has also agreed to fee reductions, including reducing
the employee-paid administrative fees from .45% to .40% for some funds and from .20% to
.15% for others (see attachment 3 for an outline of administrative fees by fund). There are
no conditions requested from Nationwide for reducing the administrative fees.
Additionally, staff is recommending modifications to the inactive 401 a Money Purchase Plan
for the City Administrator. This plan was originally set up as an employer contribution plan
and has not been in use for a number of years. This amendment will change the plan into an
employee contribution plan and activate it.
Staff believes the provisions to the ICMA-RC agreement are reasonable.
Environmental Status: Not Applicable
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a
REQUEST FOR ACTION
MEETING DATE: 2/22/2005 DEPARTMENT ID NUMEER:AS05-008
Attachment(s):
City Clerk's
Rage Number No. Description
1. Contract amendment to the Administrative Service Agreement with the
ICMA-RC
2. Contract amendment to the Governmental Money Purchase Plan &
Trust Adoption Agreement with ICMA-RC
S�Y'f�ti2-- 3. Contract amendment to the Deferred Compensation Plan
Administration agreement with Nationwide Retirement Solutions
P:\RCA\RCA 22205.doc -$- 2/8/2005 8:14 AM
ATTACHMENT # 1
AMENDMENT
TO THE
Administrative Services Agreement
for Plans Numbered 107578, 107694, 107695 and 301516
This Amendment to the Administrative Services Agreements ("Agreements") for Plans
numbered 107578, 107694, 107695 and 301516 (the"Plans") is entered by and between the City
of Huntington Beach, CA ("Employer") and ICMA Retirement Corporation("RC"), effective as
of the date of execution by the Employer below("Execution Date").
WHEREAS, the Employer sponsors the Plans on behalf of its eligible employees and retirees;
and
WHEREAS, the Employer entered the Agreements to engage RC to provide administrative
services and investments for the Plans under the terms specified in the Agreements; and
WHEREAS, the parties wish to amend the Agreements to provide for an elimination of the Plan
Administration fee and Mutual Funds Fee under the Agreements for the Plans over the term of
the Agreements contingent on the Employer's use of EZLink for enrollment and contribution
processing over the term of the Agreements; and
WHEREAS, Section 10(a) of the Agreements provides that the Agreements may be amended
pursuant to a written instrument signed by the parties;
NOW, THEREFORE, the Agreements are hereby amended as follows:
FIRST
Section 6 of the Agreements, titled"Compensation and Payment" is amended by
replacing subsections (a) and (d) with the following:
(a) Plan Administration Fee. The amount to be paid for plan administration
services under this Agreement shall be 0.0% of the amount of Plan assets
invested in the Trust.
(d)Mutual Fund Services Fee. There is an annual charge of 0.0% assessed
against average daily net Plan assets invested in the Trust's Mutual Fund Series.
The compensation and payment set forth in this Section 6 is contingent upon Employer's
use of EZLink for enrollment and contribution processing over the term of the
Agreement. Notwithstanding anything to the contrary in the Agreement,there shall be no
increase in fees during the term of the Agreement provided that the Employer uses
EZLink for enrollment and contribution processing over the term of the Agreement.
SECOND
Section 9 of the Agreements, titled "Term" is amended to provide as follows:
This Agreement shall be in effect for an initial term beginning on the Execution
Date and ending 5 years after the Execution Date. This Agreement will be
renewed automatically for succeeding 2-year terms unless the Employer provides
written notice of termination to RC the other no less than 60 days before the end
of such the initial or any succeeding term.
The fee amendment specified in section 6 of the Agreement will take effect in the
calendar quarter following RC's receipt of one fully executed copy of this
Amendment based upon the following schedule:
- Received by February 20: Effective April
- Received by May 20: Effective July
Received by August 20: Effective October
Received by November 20: Effective January
In all other respects, the Agreements are hereby ratified and affirmed.
IN WITNESS WHEREOF, Employer has caused this Amendment to be executed by its duly
authorized officer this ^'A day of3,2u. 2y, .
�Cn.S
EMPLOYER
By:
Print Name: / All PPR-QVED AS TO FORM
MGRILeonie
ATHTitle: Mov Y
Deputy City Attomey
ICMA RETIREMENT CORPORATION
by:
Paul Gallagher
Corporate Secretary
SECOND
Section 9 of the Agreements, titled "Term" is amended to provide as follows:
This Agreement shall be in effect for an initial term beginning on the Execution
Date and ending 5 years after the Execution Date. This Agreement will be
renewed automatically for succeeding 2-year terms unless the Employer provides
written notice of termination to RC the other no less than 60 days before the end
of such the initial or any succeeding term.
The fee amendment specified in section 6 of the Agreement will take effect in the
calendar quarter following RC's receipt of one fully executed copy of this
Amendment based upon the following schedule:
- Received by February 20: Effective April
- Received by May 20: Effective July
- Received by August 20: Effective October
- Received by November 20: Effective January
In all other respects, the Agreements are hereby ratified and affirmed.
IN WITNESS WHEREOF,Employer has caused this Amendment to be executed by its duly
authorized officer this cR,�`b day of ZE& ,
EMPLOYER
By:
Print Name: �/ /� PR VED AS TO FORM
MATHTitle: �Ma Xo r
Deputy City Attorney
ICMA RETIREMENT CORPORATION
by: F IE D L
Paul Gallagher
Corporate Secretary
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