title
Amendment and Restatement of the Plan Document for the North Texas Municipal Water District 457(b) Deferred Compensation Plan, Resolution No. 25-29
end
SUBJECT
recommendation
Board authorization is requested to amend and restate the plan document for the North Texas Municipal Water District 457(b) deferred compensation plan to bring the plan in compliance with recent regulatory changes that take effect on January 1, 2026
end
PURPOSE
The 457(b) plan document is being amended and restated to:
• Introduce a new Roth account allowing elective post-tax catch-up contributions for employees aged 50 or older whose prior year FICA wages exceeded $145,000, in compliance with Section 603 of the SECURE 2.0 Act of 2022 (Setting Every Community Up for Retirement Enhancement)
• Incorporate loan policy language and establish a structured process for resolving claims, enhancing plan administration and oversight; and
• Set an effective date of January 1, 2026, aligned with the IRS deadline for implementing the Roth provisions of SECURE 2.0
RECOMMENDATION
The Executive Director and NTMWD staff recommend that the Board of Directors adopt Resolution No. 25-29, authorizing the amendment and restatement of the 457(b) plan for NTMWD employees to ensure compliance with recent regulatory changes, and establish January 1, 2026 as the effective date of the amended plan document
|
Committee: |
This was an item on the May 7, 2025, Personnel Committee agenda |
DRIVER(S) FOR THIS PROJECT
|
Strategic Objective: |
4.4.3 - Ensure Resilience of District Retirement Offerings |
|
☒ Regulatory Compliance |
☐ Asset Condition |
|
☐ Capacity |
☐ Redundancy/Resiliency |
|
☐ Relocation or External Requests |
☐ Operational Efficiency |
|
☐ Safety |
☒ Administrative |
|
☐ Policy |
☐ Other _____________ |
BACKGROUND
Established on October 28, 1999, the NTMWD 457(b) deferred compensation plan offers employees the opportunity to make elective contributions to a tax-deferred savings and investment account on a pre-tax basis. The District does not provide matching contributions.
Key Features of NTMWD 457(b) Plan:
• Annual contribution limits are set in accordance with IRC Section 457(b). For 2025, the limit is $23,500
• Employees aged 50 or older can make a catch-up contribution of up to $7,500
• Employee contributions are held in constructive receipt, meaning they are not treated as wages and remain tax-deferred until withdrawn
• Contributions are invested in employee-owned, employee-directed accounts
• The plan currently has 324 enrolled employees
• Investment options and recordkeeping services are managed by Corebridge and Voya
As the plan sponsor, the District is responsible for ensuring the plan remains compliant with all applicable regulatory codes and laws by regularly updating the plan document and ensuring timely implementation of amendments. The amended and restated plan document now includes provisions for a new Roth option for employees whose prior year FICA wages exceeded a specific limit to make additional catch-up contributions on an after-tax basis. Additionally, a loan policy and an administrative process for resolving claims have been added to strengthen plan administration.
FUNDING
N/A