TRANSMITTAL LETTER FOR BOARD MEETING OF APRIL 17, 2025
COMMITTEE ON PROCUREMENT
Mr. John P. Murray, Acting Executive Director
Title
Authorization to amend the agreement for Contract 23-RFP-23 Deferred Compensation Plan Administrator, with the Variable Annuity Life Insurance Company, effective January 1, 2025 to December 31, 2029
Body
Dear Sir:
Authorization is requested to amend the agreement with the Variable Annuity Life Insurance Company (VALIC) to provide deferred compensation plan administrative services for a five-year period from January 1, 2025 through December 31, 2029. VALIC operates under the brand name of its parent company Corebridge Financial, Inc. (Corebridge) to leverage its resources and brand recognition in the marketplace.
On November 7, 2024, the Board of Commissioners authorized the Director of Procurement and Materials Management to enter into an agreement with VALIC to provide deferred compensation plan administrative services. Under this contract, VALIC provides all plan administration, recordkeeping and custodian services as outlined in the request for proposal. They administer the current investment line-up offered by the District plan, including the self-directed brokerage option, and offer access to over 12,000 mutual funds through their open architecture platform. The communication plan provided as part of these services includes a dedicated, local communication consultant that develops a customized education and communication program in partnership with the District. Self-guided retirement planning tools are also provided to participants via the participant website or through one-on-one meetings with the dedicated Certified Financial Planners. A mobile app is also available to all plan participants.
As a result of the collective bargaining process, the new bargaining agreements include a District contribution to a retirement account for each regular full-time represented employee. These contributions are based on hours actually worked by the employee, including overtime, and are paid on a quarterly basis. Employees are not required to participate in the existing District 457(b) deferred compensation plan to receive these retirement plan contributions. The hourly contribution rate for all represented employees is outlined in the collective bargaining agreements. These retirement plan contributions will also be extended to non-represented employees. The hourly contribution rate for non-represented employees will be determined as part of the annual District budget process. This new benefit will be effective July 1, 2025, with the first contributions for the period July 1, 2025 through September 30, 2025, being deposited to eligible employee retirement accounts on or about October 15, 2025.
To allow for these employer contributions, the District will establish a 401(a) plan and trust that will be administered alongside the current 457(b) deferred compensation plan. The use of a 401(a) plan will allow District employer contributions to be made without impacting the annual contribution limits for employees participating in the 457(b) deferred compensation plan. The plan provisions for the new 401(a) plan will be established to mirror the existing 457(b) deferred compensation plan except in cases where provisions are not applicable (ex. pre-tax salary deferrals, catch-up provisions and other rules related to payroll contributions) or where Internal Revenue Service (IRS) regulations do not allow. 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.
This request for authorization to amend the contract with VALIC is to allow for the administration of the new 401(a) plan to be included in the scope of work. These two retirement plans operate in a very similar fashion, are guided by many of the same laws and Internal Revenue Service (IRS) regulations and require the same administrative services. A single administrator for these two plans will also provide efficiencies for the plan participant, allowing for a single quarterly statement, a single point of contact for customer service, and continued use of the Certified Financial Planners that are already familiar with the District plan and employee population. Finally, a single provider will be more cost effective for plan participants. Since the plans would be administered side-by-side, an existing deferred compensation plan participant would not be charged an additional fee for the administration of the 401(a) account. Any new participants for whom a 401(a) account is established that do not currently participate in the deferred compensation plan would be assessed the standard quarterly administrative fee in accordance with the contract. Corebridge will assist the District in developing communications pieces providing employees with details about the new 401(a) accounts and our on-site Certified Financial Planners will be available to answer any questions about the new retirement accounts.
In view of the foregoing, it is hereby recommended that the Board of Commissioners authorize the Director of Procurement and Materials Management to amend the agreement with VALIC to include the administration of a 401(a) employer-sponsored retirement account for the five-year period from January 1, 2025 through December 31, 2029.
Recommended, Thaddeus J. Kosowski, Director of Human Resources
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Precious Brady-Davis, Chairperson, Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for April 17, 2025