Agenda Item No: L.2
AGENDA REPORT
DATE: December 3, 2024
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2025-278
Approving the Charter of the City of Fairfield Defined Contribution Retirement Plan Committee and Delegating Duties and Responsibilities over City-Sponsored Retirement Benefit Plans
Funding Source: N/A
Contact: Farbod Pirouzmand, (707) 428-7397
RECOMMENDED ACTION
Adopt resolution.
STATEMENT OF ISSUE
Staff is requesting the City Council to approve the Charter of the City’s Defined Contribution Retirement Committee and Delegate amendment authority over the City’s 457(b) and 401(a) plans to the City's Defined Contribution Retirement Committee.
DISCUSSION
The City sponsors several defined -contribution retirement and retiree health savings plans for the benefit of eligible employees and retirees (collectively, the “Plans”).
Currently, these Plans comprise: (1) three “eligible deferred compensation plans” under section 457(b) of the Internal Revenue Code (“Code”), each administered by a different recordkeeper—CalPERS/Voya, Nationwide, and MissionSquare; (2) two retirement plans qualified under section 401(a) of the Code, with Nationwide serving as the recordkeeper for one plan and MissionSquare for the other; and (3) a retiree “health reimbursement arrangement” within the meaning of IRS Notice 2002 -45, also administered by MissionSquare.
The City of Fairfield Defined Contribution Retirement Committee (“Committee”) serves as the fiduciary oversight body for the Plans. The Committee’s responsibility encompasses the following functions, among others:
(i) determining eligibility of individuals to participate or remain a participant in the Plan; (ii) authorizing distributions to Plan participants;
(iii) maintaining all necessary records for the administration of the Plan; (iv) maintaining practices and procedures necessary to administer the Plan; (v) selecting the menu of investment funds to be offered under the Plan; and (vi) assisting participant with rights, benefits, or elections available under the Plan.
City staff contracted with the law firm Pillsbury Winthrop Shaw Pittman LLP (“Pillsbury”) to obtain legal guidance concerning the role of the Committee. Based upon Pillsbury’s guidance, staff recommends that the City Council adopt a charter formally outlining the Committee’s structure, its decision -making processes, and its responsibilities concerning the Plans.
Delegation of Authority to Amend the Plans
Under federal tax laws, the City must operate the Plans in accordance with their terms. From time to time, the City may need to amend the Plans. The reasons for amending are varied and may include, for example, to conform to changes in the laws governing the Plans (most common), or to increase or decrease benefits in accordance with changes to an employee bargaining group’s Memorandum of Understanding (MOU) as approved by the City Council. Currently, only the City Council has the authority to adopt such amendments, even when they are routine or administrative.
The attached resolution delegates to the individual occupying the position of City Manager (now or in the future), or their designee, authority to adopt any amendment to the Plans, including any future iteration of the Plans, that is administrative in nature and meets one or more of the following criteria:
• The amendment does not increase the City or Plan’s costs. • The amendment is necessary or appropriate to comply with applicable laws. • The amendment is necessary or appropriate to maintain the Plan’s tax-advantaged status. • The amendment makes technical changes conforming the Plan’s terms to its operation. • The amendment clarifies the meaning of the Plan.
The City Council retains sole authority to adopt more substantive amendments that don’t meet the criteria described above.
FINANCIAL IMPACT
Adoption of this resolution does not have a financial impact on the City.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
The City Council may not approve this charter and suggest staff to adopt more substantive amendments not described above.
COORDINATED WITH
N/A
STAFF CONTACT
Farbod Pirouzmand
(707) 428-7397
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Proposed Charter