City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 02/10/2026
Subject: Mission Square 457 Retirement Plan Changes
RECOMMENDED ACTION:
Approve the recommended changes to the City of Ripon’s Deferred Compensation 457 Plan and authorize the Mayor, City Administrator or City Clerk to execute all necessary documents to implement these changes.
BACKGROUND:
The City of Ripon established a voluntary Deferred Compensation 457 Plan in 1976. In September 2001, the City began a 457 Plan with ICMA, which is now known as Mission Square.
It also offered a second plan through Strategic Retirement (currently Newport) beginning in September 2009 to provide options to employees. The Plan for Strategic Retirement/Newport mimics the ICMA/Mission Square Plan.
The Trustees for both plans are City Administrator Kevin Werner and City Clerk Lisa Roos, by name. and were updated in 2014. Over the last 50 years, the City’s 457 Plans have been amended in order to be in compliance with IRS regulations, to change investment types or to change the name of the record keepers or the custodians. 457 Plans are beneficial to government employees because they allow them to contribute additional pre-tax dollars into a retirement account separate from the City’s Defined Contribution Plan (401a) or Defined Benefit Plan (CalPERS) allowing for another retirement investment opportunity for employees. An additional benefit to 457 Plans is that there is no early withdrawal penalty when someone separates from the City.
The IRS sets limits on how much individuals can contribute to their 457 Plan and this amount is adjusted each year. For 2026, the maximum contribution is $24,500. Employees over 50 can contribution an additional $8,000 catch-up and employees ages 60-63 can contribute a $11,250 “super catch-up” instead of the $8,000.
DISCUSSION/ANALYSIS:
Due to the Secure 2.0 Act starting in 2026, if an employee earned over $150,000 in wages in the prior year, their catch up contributions must be Roth Contributions. If the employer does not offer a Roth option within their plan, then the employee cannot make the additional catch-up contributions. A Roth contribution is an after-tax payment where taxes are paid up front, allowing the money to grow tax-free until retirement. Staff recommends the City’s current plan be modified to comply with the Secure 2.0 Act.
In addition to the changes to comply with the Secure 2.0 Act, staff is recommending changes that would provide increased flexibility for City employees who choose to participate. Participation in the 457 Plan is completely voluntary, and all contributions to the plan are 100 percent employee-funded. Staff recommends offering employees the following options to enhance flexibility beyond what is currently available:
Age 60-63 catch-up – allows someone age 60-63 to contribute the additional amount set annually by the IRS.
Qualified Federally Declared Disaster Relief Distribution - allows someone to take a distribution when a federally disaster is declared in their area. Emergency Expense Withdrawals – allows someone to take a withdrawal for an emergency incurred.
Self-Certification for Unforeseeable Emergency Withdrawals – allows someone to selfcertify their Emergency event for a withdrawal without the City’s approval. Penalty-free Withdrawals for Individuals in Case of Domestic Abuse – allows someone to take a penalty-free withdrawal if it is related to domestic abuse. Eliminate the “first day of the month” requirement for 457(b) plans – allows employee to begin participating upon employment and not have to wait until the first day of the following month.
In Service Distributions at Age 59.5 – allows employees to take distributions if they are still working and have attained age 59.5
Qualified Birth and Adoption Distributions – allows someone to take a distribution for birth and adoption expenses.
FISCAL IMPACT:
There is no fiscal impact to the City for this change.
Attachments:
1. Request for 2.0 changes checklist