TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager/Chief Executive Officer
SUBJECT: Deferred Compensation Governance
BRIEFING ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider receiving a report on the formation of a formal governance structure for the District's existing 457(b) deferred compensation plan.
Staff Contact:
Chris Andrichak, Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - High-Performing Workforce
Initiative - Employee Recruitment, Training and Retention
The District's 457(b) deferred compensation plan is an important benefit for employees to help save for their retirement as a complement to their pension.
BUDGETARY/FISCAL IMPACT:
The 457(b) plan expenses are paid for by the participants, the only direct cost to the District is the staff time required to administer the plan and its related consultants. Adding a Brown Act committee for the plan would increase workload for the District Secretary's department as well as the Finance department.
BACKGROUND/RATIONALE:
The District first established a deferred compensation plan (also known as a defined contribution plan) under Internal Revenue Service code section 457(b) in 1979 as a benefit for employees that allows them to save for retirement in addition to the existing defined benefit pension plan. The 457(b) plan is also known as a defined contribution (DC) plan, as opposed to pension plans which are also known as defined benefit (DB) plans. The 457(b) is a complement to the pension, allowing employees supplement their pension payments in retirement. A 457(b) plan is essentially the government agency version of the 401(k) plans offered by private employers.
Since the plan was established, it has primarily been administered by the Finance Department. Over the years, the federal government has added various optional provisions to 457(b) plans, such as participant loans and catch-up provisions. Most recently congress passed the Se...
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