Agenda #: 5.5
Meeting Date: November 19, 2024
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: ADMINISTRATIVE SERVICES AGREEMENT WITH MISSIONSQUARE RETIREMENT FOR 457 DEFERRED COMPENSATION PLAN
SERVICES.
STRATEGIC
GOAL: Open, Engaged & Responsive Government
RECOMMENDATION:
Adopt Resolution No. 2024-40 approving, and authorizing the City Manager to sign, the Agreement with MissionSquare Retirement for 457 Deferred Compensation Plan Services.
FINANCIAL IMPACT:
None. All contributions made to the 457 Deferred Compensation Plan and associated fees are paid for by plan participants and not by the City.
BACKGROUND:
The City of Diamond Bar has provided a voluntary 457 deferred compensation plan for its employees and City Council Members for over 25 years. Plan participants voluntarily contribute to the plan on a pre-tax basis towards their retirement savings account. The City has used one vendor, MissionSquare Retirement (formerly ICMA-RC), as their 457- plan record keeper for the entire life of the plan. During the last five years the size of the City’s plan has grown by nearly 50% and created an opportunity for the City to take advantage of a more competitive market for investment diversification, additional investment options and reduced fees for plan participants.
Since 2013, the City’s Deferred Compensation Plan Committee has been working with Fiduciary Experts, LLC to put best practices in place for the monitoring and oversight of the 457 deferred compensation plan. Fiduciary Experts, LLC assisted the City in negotiating two prior contract amendments with the 457-plan provider which resulted in lower administrative costs for plan participants. The last contract amendment took place in January 2020 where the City Council took action to authorize the City Manager to approve a new Administrative Services Agreement with ICMA-RC (now MissionSquare Retirement) to improve the plan and reduce fees for participants.
Since 2020, the total 457 plan assets have grown from $10.6M to over $15M. Ahead of the expiration of the five-year agreement with MissionSquare Retirement in January 2025, the City’s Deferred Compensation Plan Committee gave direction to Fiduciary Experts, LLC to reach out to MissionSquare Retirement and assist the City in renegotiating more favorable contract terms for plan participants. The City’s consultant was able to, yet again, negotiate reduced administrative fees for the plan participants.
In addition to a 50% reduction of administrative fees to plan participants (17.5 basis points to 8.5 basis points). The plan will continue to offer voluntary managed account options, conversion of the plan to a Roth 457 account to allow for voluntary pre-tax and after-tax contributions, and further diversification of investment options for plan participants.
Due to the City’s long-standing relationship with MissionSquare Retirement as a reliable business partner, and the competitiveness of the proposed Administrative Services Agreement, it is recommended that the City Council adopt the proposed resolution (Attachment 1) and authorize the City Manager to sign and execute all necessary paperwork to renew the contract with MissionSquare Retirement for 457 Deferred Compensation Plan Services (Attachment 2).
LEGAL REVIEW:
The City Attorney has reviewed and approved the Resolution as to form.
PREPARED BY:
REVIEWED BY:
Attachments:
1. 5.5.a Resolution No. 2024-40
2. 5.5.b MissionSquare Retirement Administrative Services Agreement