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Amendment and Restatement of the Plan Document for the NTMWD 457(b) Deferred Compensation Plan
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SUBJECT
recommendation
Adopt Resolution 24-40 authorizing the amendment and restatement of the plan document for the North Texas Municipal Water District 457(b) Deferred Compensation Plan
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PURPOSE
The amendment and restatement of the plan document for the 457(b) Plan for Employees of NTMWD are necessary to maintain compliance with applicable regulations and consolidate material compliance modifications into one plan document. The updated plan document also establishes an effective date of January 1, 2025.
RECOMMENDATION
The Executive Director and NTMWD staff recommend the Board of Directors adopt Resolution 24-40 authorizing the amendment and restatement of the 457 (b) Plan for the Employees of NTMWD.
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Committee: |
This item was on the August 7, 2024, Personnel Committee meeting agenda. |
DRIVER(S) FOR THIS PROJECT
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Strategic Objective: |
4.4 Employer of Choice |
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☒ Regulatory Compliance |
☐ Asset Condition |
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☐ Capacity |
☐ Redundancy/Resiliency |
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☐ Relocation or External Requests |
☐ Operational Efficiency |
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☐ Safety |
☒ Administrative |
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☐ Policy |
☐ Other _____________ |
BACKGROUND
The North Texas Municipal Water District’s 457(b) deferred compensation plan was established, effective October 28, 1999, to allow employees to make voluntary deferrals into tax-deferred employee-owned retirement accounts. The District does not contribute or match employees’ contributions. Other features of the 457(b) plan include:
• Annual contribution limits are established by the Internal Revenue Service
• Employees own and direct the investment decisions for their individual accounts
• The District provides investment options through third parties (Voya and Corebridge)
• Employees can make withdrawals upon termination of employment, retirement or due to mandatory payout upon attaining a minimum distribution age
• Employees can make hardship withdrawals from their individual accounts
• 312 employees currently participate in the plan
The 457(b) deferred compensation plan is being amended and restated for recent legislation to:
• Incorporate the provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) ACT of 2019 that raise the “required minimum distribution” from 72 to age 73
• Remove the 10% penalty for early distributions due to terminal illness
• Consolidate material compliance modifications previously made in “snap-on” adoption agreements to the plan document
• Add provisions of Corona Virus Aid, Relief and Economic Security (CARES) Act of 2020. Although this is an old provision, the plan is still required to reflect it in the plan document
The amendment and restatement ensure that the plan remains an eligible deferred compensation plan under Section 457(b) of the Internal Revenue Code and is a government plan with the meaning of applicable codes that exclude government plans from the requirements of Employee Retirement Income Security Act (ERISA) of 1974.
FUNDING
N/A