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By Chris Frost
Tri County Sentry
Oxnard--The Finance and Governance Committee, Tuesday, June 8, recommended the city council adopt a resolution appointing an administrator for the city's 457b and 401a plans and delegate the amendment authority for the city's 457b and 401a plan.
The administrator will be responsible for the day-to-day operation of the plans and determine the eligibility of individuals to participate in or remain a participant in the plans.
The administrator will authorize distribution to plan participants and maintain all the necessary records to administer the plans.
The City of Oxnard sponsors 457b and 401a defined contribution retirement plans that benefit eligible employees, and there was no designation of an administrator in the original documents.
Human Resources Manager Mike More presented the item to the committee and said the 457b and 401a are similar to 401k plans in the private sector.
"This is the public sector version of that particular plan," he said. "It allows employees to defer a portion of their salary for retirement. The current plan has been with Voya Financial since August 2019. Prior to that, the city had multiple different plans with different providers, such as Nationwide, ICMARC, and MassMutual."
The administrator will also select the menu of investment options offered under the plans and assist participants with rights, benefits, or elections available under the plans.
"Our outside counsel, Pillsbury Winthrop Shaw Pittman, recommended this after reviewing our plan and said the city manager or his or her designee should be designated as the administrator," Moore said. "This is an industry best practice. The administrative role is generally outside the normal duties and responsibilities of the city council. The city council operates at an oversight level, and the administrator does the day-to-day work with regard to the plans."
He said the attorney recommended the city add an annual report received by the city council from the administrator regarding the plan's operation.
"The administrator acts as a fiduciary, so the fiduciary acts on behalf of another person or persons, putting that person's interest ahead of their own," he said. "The administrator, as the fiduciary, has the duty to act solely in the best interest of the participants and has a duty to act with care, skill, prudence, and diligence."
More reiterated that the city council would oversee the administrator's functions.
"The resolution would allow the administrator to approve administrative plan amendments only if the following instances are present," he said. "If it does not increase the city or plan's costs, if it is necessary to comply with applicable laws, changes in federal tax law, for instance, if it is necessary are appropriate to maintain the plan's tax-qualified or eligible status. If the amendment makes technical changes conforming the plan's terms to its operation if the administrative amendment clarifies the meaning of the plan, or if it is necessary to implement a change in benefits provided under an MOU approved by the city council."
More said, in no instance would the plan administrator be able to increase or decrease benefits under the plan without city council approval.
"It would only be allowed to implement changes that were already approved by the council if there was a benefit change in the plan," he said.
Committee Chairman John Zaragoza said the city's 457b and 401a are excellent programs.
"If we have city employees that save some money, you always pay for yourself, and you pay the bills and pay for your mortgage, it does not hurt to pay yourself with one of those plans," he said. "I think the 457 does not have a matching. Does the 401 have a matching?"
More said, the 401a plan is a city contribution plan, which is made on behalf of the employees.
"It varies by employee group, and some have .9 percent," he said. "Some have 1 percent or more. It is the city contributing on behalf of their employees for their retirement. The 457 is employee contributions only, but we have a very good participation rate. We have a very good plan now that we've consolidated from Voya."
The item passed unanimously and moves to the full city council.