Consideration and Adoption of Resolution No. 2013-24:  A resolution adopting a new City of Flagstaff 457(b) Deferred Compensation Plan and establishing an effective date.

Adopt Resolution No. 2013-24 adopting the City's 457(b) Deferred Compensation Plan.

Subsidiary Decisions Points: 
The City will modify the ING Specimen Plan Document for Government Employers and adopt this document since it has already received approval from the Internal Revenue Service (IRS).  This allows the City to remain in compliance without having additional outside legal expenses or having to obtain an individual IRS determination letter.

The Plan Document has been updated to include the following Federal regulation changes: Pension Protection Act (PPS), Heroes Earnings Assistance and Relief Tax Act (HEART) and the Worker, Retiree and Employer Recovery Act (WRERA).

The Plan Document now includes provisions for Roth (after-tax) deferrals.  Employees may elect Roth deferrals after the Plan Document has been adopted and the payroll programming has been completed.

The financial impact is the indirect cost associated with Human Resources and Payroll staff time to administer the benefit.  Previously this was estimated at two hours per pay period including new employee orientation, enrollment and data entry.  The employee pays the administrative and investment fees associated with the compensation deferred and invested.

♦Review financial viability of pensions: The deferred compensation plan is an additional retirement benefit available to City employees.
♦Effective governance: Providing retirement benefit options is a tool for recruitment and retention of employees.

Yes, the City Council reconfirmed the current 457(b) Deferred Compensation Plan on August 14, 2003 and again on January 17, 2006.

1) The City Council may choose to develop an individualized deferred compensation plan document.
2) The City Council may choose to not offer a 457(b) deferred compensation plan.
3) The City Council may choose to allow for other types of 457(b) deferred compensation plan benefits such as loans, minimum distributions, etc.

On April 21, 1983, the City adopted the 457 Deferred Compensation Plan pursuant to Section 457 of the Internal Revenue Code.  The purpose of the Plan is to attract and retain employees by providing additional opportunities for retirement saving.

The City Manager adopted the City’s 457 Deferred Compensation Plan Document in 1983.  The City Council confirmed the adoption of the 457 Deferred Compensation Plan in August of 2003 with resolution 2003-156 and again in January 2006 with resolution 2006-05. 

ING and ICMA are the two financial providers the City has an agreement with to provide services and investment products under this Plan.

Inform

The City Council may choose to develop an individualized deferred compensation plan document. 

• The Plan Document may be more user friendly since it would be drafted specifically for the City of Flagstaff.
• There would be outside legal counsel costs associated with deferred compensation plan regulation and design expertise.
• The City would need to obtain a separate Internal Revenue Service determination ruling.

The City Council may choose to not offer a 457(b) deferred compensation plan.

• This would save the indirect costs of staff time to administer the benefit.
• This may limit the number of qualified applicants for open vacancies because the City does not offer retirement savings options outside of the Arizona State Retirement and Public Safety Personnel Retirement Systems.

The City Council may choose to allow for other types of 457(b) deferred compensation plan benefits such as loans, minimum distributions, etc.

• Adding these additional benefits provide further options to employees.
• Adding these additional benefits increase the amount of time needed to administer the deferred retirement plan.
• There are pros and cons associated with each type of additional benefit that could be discussed further, if the City Council is interested.