To: Board of Supervisors
From: Treasurer/Tax Collector
Agenda Section: Consent
SUBJECT:
title
401(a) Defined Contribution Plan Termination
end
RECOMMENDATION(S):
Recommendation
That the Board of Supervisors:
1. Approve Resolution ____ to terminate the county 401(a) Defined Contribution Plan (Attachment 1)
2. Authorize the Treasurer-Tax Collector to send the letter of intent to Empower to begin the process of terminating the 401(a) Defined Contribution Plan (Attachment 2)
Body
SOURCE OF FUNDING:
Treasurer - Tax Collector 1100-112
DISCUSSION:
Humboldt County adopted a 401(a) Defined Contribution Plan on May 28, 2002, Resolution 02-48 (Attachment 3). The 401(a) was primarily established to enable long-term employees with significant paid-to-off (PTO) to tax defer a portion of that PTO compensation owed to them upon retirement. The 401(a) is a separate and distinct plan from the 457 Deferred Compensation Plan, which will continue as-is and will not be impacted or affected by this agenda item in any way.
All retirement plans must abide by Internal Revenue Service (IRS) guidelines. A condition of meeting those guidelines is that all employers must restate their plan documents every 6 years to incorporate legal updates that have occurred during that timeframe. Upon review of those restatement documents the Treasurer-Tax Collector (TTC), the designated 'Plan Administrator' for county retirement savings plans, found that IRS guidance for 401(a) plans and specifically the '414(h)(2) pick-up contributions' provision within 401a plans, had changed since the last restatement period (2016). Wherein the county 401(a) no longer meets the standardized 401(a) Summary of Plan Provisions document under 'Mandatory Contributions.' The current statement outlines that "As a condition of employment, you (the employee) must agree to contribute from 1% to 50% of your compensation to the Plan"; as compared to the original county Plan Document, and the previous resta...
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