TRANSMITTAL LETTER FOR BOARD MEETING OF SEPTEMBER 18, 2025
COMMITTEE ON PENSION, HUMAN RESOURCES & CIVIL SERVICE
Mr. John P. Murray, Acting Executive Director
Title
Authorization to implement the Plan Document for the Metropolitan Water Reclamation District of Greater Chicago 401(a) Plan, effective July 1, 2025
Body
Dear Sir:
Authorization is requested to formally establish the Metropolitan Water Reclamation District of Greater Chicago 401(a) Plan (Plan). The primary purpose of the Plan is to provide supplemental retirement savings to employees of the District in accordance with Section 401(a) of the Internal Revenue Code (IRS). The Plan Document provides the rules that govern the operation of the Plan. The Plan will be effective July 1, 2025.
As a result of the collective bargaining process in 2024, the new bargaining agreements included a District contribution to a 401(a) retirement account for each regular full-time, represented employee. This benefit was extended to non-represented employees as part of the 2025 budget. This new retirement benefit became effective with all eligible hours worked beginning July 1, 2025. The first contributions are for the third quarter of 2025 and will be deposited to eligible employee retirement accounts on or about October 15, 2025.
On April 17, 2025, the Board of Commissioners authorized the Director of Procurement and Materials Management to amend the agreement with Variable Annuity Life Insurance Company (VALIC) for deferred compensation plan administrative services to include the administration of these 401(a) employer-sponsored retirement accounts. The agreement with VALIC to provide deferred compensation plan administrative services is for the five-year period from January 1, 2025 through December 31, 2029.
The 401(a) plan will be administered alongside the current 457(b) deferred compensation plan. It will be governed by the attached Plan Document which outlines the provisions of the plan and ensures compliance with appropriate IRS regulations. The plan provisions for the new 401(a) plan have been written to mirror the existing 457(b) deferred compensation plan except in cases where provisions are not applicable or where Internal Revenue Service (IRS) regulations do not allow. Plan provisions related to employee eligibility, normal retirement age, distributions, and rollover contributions are the same as those for the 457(b) deferred compensation plan. Provisions related to pre-tax salary deferrals, catch-up contributions, Roth accounts, matching contributions and other payroll related topics are not applicable since this plan utilizes only employer contributions. Provisions related to employer contributions, contribution rates, and vesting have been written to correspond with the collective bargaining agreements.
The investment options for the 401(a) plan will be identical to the existing deferred compensation plan and participants will be able to choose how their contributions are allocated just as they do under the deferred compensation plan. A new 401(a) account will be established for each eligible employee having hours actually worked in the period beginning July 1, 2025.
The Deferred Compensation Committee (Committee), with the assistance of its investment consultant, monitors the plan to ensure that it is administered in accordance with the Plan Document. The Committee consists of the Chairman of Finance, the Treasurer, and the Director of Human Resources and serves as fiduciaries of the plan. The Committee meets with VALIC on a quarterly basis to monitor the administration of the plan. It also receives quarterly reporting and meets twice each year with its investment consultant to ensure the effective administration of the plan and monitor the performance of its investment line-up.
The Committee requests that the Board of Commissioners, as Trustee for the Plan, approve the implementation of the Plan Document for the Metropolitan Water Reclamation District of Greater Chicago 401(a) Plan.
Respectfully Submitted, Marcelino Garcia, Chairman of Finance; Stephen J. Lux, Treasurer; Thaddeus J. Kosowski, Director of Human Resources
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for September 18, 2025
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