TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager/Chief Executive Officer
SUBJECT: 457(b) Plan Services RFP
ACTION ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider authorizing the issuance of a Request for Proposal (RFP) for 457(b) Plan Administrative Services.
Staff Contact:
Chris Andrichak, Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - High-Performing Workforce
Initiative - Employee Recruitment, Training and Retention
Having a well-managed defined contribution 457(b) plan for employees is a significant benefit for employees. In addition, as part of their fiduciary duties, retirement plan fiduciaries should periodically evaluate the services and costs of the plan's service providers to confirm appropriateness.
BUDGETARY/FISCAL IMPACT:
There is no budgetary or fiscal impact to the District from approving release of an RFP. The fees paid to the administrative services provider (also known as a recordkeeper) - currently Empower Retirement (Empower) - and the investment providers come from the plan assets (investments) owned by the participants. As of the end of February 2023, the total plan assets were approximately $150 million. The estimated yearly fee total owed to Empower out of the plan assets was $250,000 or 0.17% of total plan assets, along with approximately $220,000 in fees paid to the investment providers or 0.15% of total plan assets.
BACKGROUND/RATIONALE:
The District's current Internal Revenue Code Section 457(b) deferred compensation plan has Empower as its administrative services provider (also known as a recordkeeper). Empower took over this contract by acquiring the retirement plan business of the Massachusetts Mutual Life Insurance Company (MassMutual) in 2021. MassMutual had previously acquired the retirement plan business of The Hartford Financial Services Group.
In the past few years, two new federal bills have been passed, significantly affecting defined contrib...
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