CC - Item 4F - Contract Extension With International City Management Association Retirement Corporation To Provide Deferred Compensation Program ServicesROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: OCTOBER 8, 2014
SUBJECT: CONTRACT EXTENSION WITH INTERNATIONAL CITY
MANAGEMENT ASSOCIATION RETIREMENT CORPORATION (ICMA -
RC) TO PROVIDE DEFERRED COMPENSATION PROGAM SERVICES
SUMMARY
The City Council will consider an action to extend the agreement with the City's existing
deferred compensation program provider.
Staff Recommendation
It is recommended that the City Council authorize the City Manager to execute a five (5) year
contract extension with ICMA -RC.
BACKGROUND
The City Council established a deferred compensation plan with International City Management
Association Retirement Corporation (ICMA -RC) on November 27, 1979 to provide deferred
compensation program services. The agreement signed in 1979 is auto - renewing and is very
common for this type of agreement to renew indefinitely. In accordance with the current
agreement, the City and ICMA -RC may mutually agree to extend the term of this agreement and
staff has negotiated a five -year extension to the agreement with cost savings and
enhancements.
Over the past 34 years, ICMA -RC has provided a range of services to the City for the operation
of employee retirement plans including, but not limited to, communications concerning
investment alternatives, account maintenance, account recordkeeping, investment and tax
reporting, transaction processing, benefit disbursement, and asset management.
In order to ensure that a high standard of service is maintained, staff has worked with ICMA -RC
to negotiate the following:
Five -year term extension
Reduced plan administration fee by 15 basis points (0.40% per annum of the amount of
plan assets)
Newly assigned field representative to provide personalized service
ITEM NUMBER: - LF
City Council Meeting
October 8, 2014
Page 2 of 2
With the new five year term, the annual cost savings in lowered investment expenses are
estimated to be $4,700. In addition, in order to enhance customer service, a local field
representative has been assigned to the City to provide personalized customer service. The
local field representative will be available, on a quarterly basis, to sit down and meet with the
employees to answer questions, review individual portfolios and provide guidance in retirement
planning.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
FISCAL IMPACT:
Funding has been included in the 2013 -2014 City Budget to fully fund this item.
..
Su Tan
Human Resources Manager
Attachment: Extension of Agreement
ADMINISTRATIVE SERVICES AGREEMENT
Between
ICMA Retirement Corporation
and
City of Rosemead
Type: 457
Account #: 300934
Type: 401
Account #: 106564
IC
Plan numbers 300934, 106564
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ( "Agreement "), made as of the day
of , 2013 (herein referred to as the "Inception Date "), between the International
City Management Association Retirement Corporation ( "ICMA -RC "), a nonprofit
corporation organized and existing under the laws of the State of Delaware, and the City
of Rosemead ( "Employer "), a City organized and existing under the laws of the State of
California with an office at 8838 East Valley Boulevard, Rosemead, California 91770.
RECITALS
Employer acts as public plan sponsor of a retirement plan ( "Plan"), and in that
capacity, has responsibility to obtain administrative services and investment alternatives
for the Plan;
VantageTrust (the "Trust") is a group trust established and maintained in
accordance with New Hampshire Revised Statutes Annotated section 391:1 and Internal
Revenue Service Revenue Ruling 81 -100, 1981 -1 C.B. 326, which provides for the
commingled investment of retirement funds held by various state and local governmental
units for their employees;
ICMA -RC acts as investment adviser to VantageTrust Company, the Trustee of
the Trust;
ICMA -RC has designed, and the Trust offers, a series of separate funds (the
"Funds ") for the investment of plan assets as referenced in the Trust's principal
disclosure document, "Making Sound Investment Decisions: A Retirement Investment
Guide." ( "Retirement Investment Guide ").
The Funds are available only to public employers and only through the Trust and
ICMA -RC.
In addition to serving as investment adviser to the Trust, ICMA -RC provides a
range of services to public employers for the operation of employee retirement plans
including, but not limited to, communications concerning investment alternatives,
account maintenance, account recordkeeping, investment and tax reporting, transaction
processing, benefit disbursement, and asset management.
Plan numbers 300934, 106564
AGREEMENTS
Appointment of ICMA -RC
Employer hereby appoints ICMA -RC as Administrator of the Plan to perform all
nondiscretionary functions necessary for the administration of the Plan. The functions to
be performed by ICMA -RC shall be those set forth in Exhibit A to this Agreement.
2. Adoption of Trust
Employer has adopted the Declaration of Trust of VantageTrust Company and agrees to
the commingled investment of assets of the Plan within the Trust. Employer agrees that
operation of the Plan and the investment, management, and distribution of amounts
deposited in the Trust shall be subject to the Declaration of Trust, as it may be amended
from time to time and shall also be subject to terms and conditions set forth in disclosure
documents (such as the Retirement Investment Guide or Employer Bulletins) as those
terms and conditions may be adjusted from time to time.
3. Exclusivity Agreement [
Employer agrees that for the initial or succeeding term of this Agreement specified in
Section 10, so long as ICMA -RC continues to perform in all material respects the
services to be performed by it under this Agreement, Employer shall not obtain plan
administration from anyone other than ICMA -RC. Employer acknowledges that ICMA-
RC has agreed to the compensation to be paid to ICMA -RC under this Agreement in the
expectation that ICMA -RC will be able to offset costs allocable to performing this
Agreement with revenues arising from Employer's exclusive use of ICMA -RC at the
rates provided herein throughout the initial or succeeding term.
4. Employer Duty to Furnish Information
Employer agrees to furnish to ICMA -RC on a timely basis such information as is
necessary for ICMA -RC to carry out its responsibilities as Administrator of the Plan,
including information needed to allocate individual participant accounts to Funds in the
Trust, and information as to the employment status of participants, and participant ages,
addresses, and other identifying information (including tax identification numbers).
Employer also agrees that it will notify ICMA -RC in a timely manner regarding changes
in staff as it relates to various roles. This is to be completed through the online EZLink
employer contact options. ICMA -RC shall be entitled to rely upon the accuracy of any
information that is furnished to it by a responsible official of the Employer or any
information relating to an individual participant or beneficiary that is furnished by such
participant or beneficiary, and ICMA -RC shall not be responsible for any error arising
from its reliance on such information. ICMA -RC will provide reports, statements and
account information to the Employer through EZLink, the online plan administrative tool.
Plan numbers 300934, 106564
Employer is required to send in contributions through EZLink, the online plan
administration tool provided by ICMA -RC. Alternative electronic methods may be
allowed, but must be approved by ICMA -RC for use. Contributions may not be sent
through paper submittal documents.
To the extent Employer selects third -party funds that do not have fund profile
information provided to ICMA -RC through our electronic data feeds from external
sources (such as Morningstar) or third party fund providers, the Employer is responsible
for providing to ICMA -RC timely fund investment updates for disclosure to Plan
participants. Such updates may be provided to ICMA -RC through the Employer's
investment consultant or other designated representative.
Failure to provide timely fund profile update information, including the source of the
information, may result in a lack of fund information for participants, as ICMA -RC will
remove outdated fund profile information from the systems that provide fund information
to Plan participants.
5. Certain Representations and Warranties
ICMA -RC represents and warrants to Employer that:
(a) ICMA -RC is a non -profit corporation with full power and authority to
enter into this Agreement and to perform its obligations under this
Agreement. The ability of ICMA -RC to serve as investment adviser to the
Trust is dependent upon the continued willingness of the Trust for ICMA-
RC to serve in that capacity.
(b) ICMA -RC is an investment adviser registered as such with the U.S.
Securities and Exchange Commission under the Investment Advisers Act
of 1940, as amended. ICMA -RC Services, LLC (a wholly owned
subsidiary of ICMA -RC) is registered as a broker - dealer with the U.S.
Securities and Exchange Commission ( "SEC ") and is a member in good
standing with Financial Industry Regulatory Authority ( "FINRA ") and the
Securities Investor Protection Corporation ( "SIPC ").
(c)(i) ICMA -RC shall maintain and administer the Plan in compliance with the
requirements for eligible deferred compensation plans under Section 457
of the Internal Revenue Code and other applicable federal law; provided,
however, that ICMA -RC shall not be responsible for the eligible status of
the Plan in the event that the Employer directs ICMA -RC to administer the
Plan or disburse assets in a manner inconsistent with the requirements of
Section 457 or otherwise causes the Plan not to be carried out in
accordance with its terms. Further, in the event that the Employer uses its
own customized plan document, ICMA -RC shall not be responsible for
the eligible status of the Plan to the extent affected by terms in the
Employer's plan document that differ from those in ICMA -RC's standard
plan document. ICMA -RC shall not be responsible for monitoring state or
1d
Plan numbers 300934, 106564
local law or for administering the Plan in compliance with local or state
requirements unless Employer notifies ICMA -RC of any such local or
state requirements.
(c)(ii) ICMA -RC shall maintain and administer the Plan in compliance with the
requirements for plans which satisfy the qualification requirements of
Section 401 of the Internal Revenue Code and other applicable federal
law; provided, however, ICMA -RC shall not be responsible for the
qualified status of the Plan in the event that the Employer directs ICMA-
RC to administer the Plan or disburse assets in a manner inconsistent with
the requirements of Section 401 or otherwise causes the Plan not to be
carried out in accordance with its terms; provided, further, that if the plan
document used by the Employer contains terms that differ from the terms
of ICMA -RC's standardized plan document, ICMA -RC shall not be
responsible for the qualified status of the Plan to the extent affected by the
differing terms in the Employer's plan document. ICMA -RC shall not be
responsible for monitoring state or local law or for administering the Plan
in compliance with local or state requirements unless Employer notifies
ICMA -RC of any such local or state requirements.
Employer represents and warrants to ICMA -RC that:
(d) Employer is organized in the form and manner recited in the opening
paragraph of this Agreement with full power and authority to enter into
and perform its obligations under this Agreement and to act for the Plan
and participants in the manner contemplated in this Agreement. Execution,
delivery, and performance of this Agreement will not conflict with any
law, rule, regulation or contract by which the Employer is bound or to
which it is a party.
(e) Employer understands and agrees that ICMA -RC's sole function under
this Agreement is to act as recordkeeper and to provide administrative,
investment or other services at the direction of Plan participants, the
Employer, its agents or designees in accordance with the terms of this
Agreement. Under the terms of this Agreement, ICMA -RC does not
render investment advice, is not the Plan Administrator or Plan Sponsor as
those terms are defined under applicable federal, state, or local law, and
does not provide legal, tax or accounting advice with respect to the
creation, adoption or operation of the Plan and the Trust. ICMA -RC does
not perform any service under this Agreement that might cause ICMA -RC
to be treated as a "fiduciary" of the Plan under applicable law.
(f) Employer acknowledges and agrees that ICMA -RC does not assume any
responsibility with respect to the selection or retention of the Plan's
investment options. Employer shall have exclusive responsibility for the
Plan's investment options, including the selection of the applicable mutual
fund share class. Where applicable, Employer understands that the
Plan numbers 300934, 106564
VantageTrust Retirement Income Advantage Fund is an investment option
for the Plan and that the fund invests in a separate account available
through a group variable annuity contract. By entering into this
Agreement, Employer acknowledges that it has received the Important
Considerations document and the Retirement Investment Guide and that it
has read the information therein concerning the VantageTrust Retirement
Income Advantage Fund.
(g) Employer acknowledges that certain such services to be performed by
ICMA -RC under this Agreement may be performed by an affiliate or
agent of ICMA -RC pursuant to one or more other contractual
arrangements or relationships, and that ICMA -RC reserves the right to
change vendors with which it has contracted to provide services in
connection with this Agreement without prior notice to Employer.
(h) Employer acknowledges that it has received ICMA -RC's Fee Disclosure
Statement, prepared in substantial conformance with ERISA regulations
regarding the disclosure of fees to plan sponsors.
(i) Employer approves the use of its Plan in ICMA -RC external media,
publications and materials. Examples include press releases
announcements and inclusion of the general plan information in request
for proposal responses.
6. Participation in Certain Proceedings
The Employer hereby authorizes ICMA -RC to act as agent, to appear on its behalf, and to
join the Employer as a necessary party in all legal proceedings involving the gamishment
of benefits or the transfer of benefits pursuant to the divorce or separation of participants
in the Plan. Unless Employer notifies ICMA -RC otherwise, Employer consents to the
disbursement by ICMA -RC of benefits that have been garnished or transferred to a
former spouse, current spouse, or child pursuant to a domestic relations order or child
support order.
Compensation and Payment
(a) Plan Administration Fee. The amount to be paid for plan administration
services under this Agreement shall be 0.40% per annum of the amount of
Plan assets invested in the Trust. Such fee shall be computed based on
average daily net Plan assets in the Trust.
(b) Mutual Fund Services Fee. There is an annual charge of 0.15% assessed
against average daily net Plan assets invested in the Trust's non-
proprietary Trust Series funds.
(c) Compensation for Management Services to the Trust, Compensation
for Advisory and other Services to The Vantagepoint Funds and
Plan numbers 300934, 106564
Payments from Third -Party Mutual Funds. Employer acknowledges
that in addition to amounts payable under this Agreement, ICMA -RC
receives fees from the Trust for investment management services
furnished to the Trust. Employer further acknowledges that certain wholly
owned subsidiaries of ICMA -RC receive compensation for advisory and
other services furnished to The Vantagepoint Funds, which serve as the
underlying portfolios of a number of Funds offered through the Trust. For
a Trust fund that invests substantially all of its assets in a third -party
mutual fund not affiliated with ICMA -RC, ICMA -RC or its wholly owned
subsidiary receives payments from the third -party mutual fund families or
their service providers in the form of 12b -1 fees, service fees,
compensation for sub - accounting and other services provided based on
assets in the underlying third -party mutual fund. These fees are described
in the Retirement Investment Guide and ICMA -RC's fee disclosure
statement. In addition, to the extent that third party mutual funds are
included in the investment line -up for the Plan, ICMA -RC receives
administrative fees from its third party mutual fund settlement and
clearing agent for providing administrative and other services based on
assets invested in third party mutual funds; such administrative fees come
from payments made by third party mutual funds to the settlement and
clearing agent.
(d) Redemption Fees. Redemption fees imposed by outside mutual funds in
which Plan assets are invested are collected and paid to the mutual fund by
ICMA -RC. ICMA -RC remits 100% of redemption fees back to the
specific mutual fund to which redemption fees apply. These redemption
fees and the individual mutual fund's policy with respect to redemption
fees are specified in the prospectus for the individual mutual fund and
referenced in the Retirement Investment Guide.
(e) Payment Procedures. All payments to ICMA -RC pursuant to this
Section 7 shall be made from Plan assets held by the Trust or received
from third party mutual funds or their service providers in connection with
Plan assets invested in such third party mutual funds, to the extent not paid
by the Employer. The amount of Plan assets held through the Trust shall
be adjusted by the Trust as required to reflect any such payments as are
made from Plan assets invested in the Trust. In the event that the
Employer agrees to pay amounts owed pursuant to this section 7 directly,
any amounts unpaid and outstanding after 30 days of invoice to the
Employer shall be withdrawn from Plan assets held by the Trust.
The compensation and payment set forth in this section 7 is contingent upon the
Employer's use of ICMA -RC's EZLink system for contribution processing and
submitting contribution funds by ACH or wire transfer on a consistent basis over the
term of this Agreement.
Plan numbers 300934, 106564
8. Contribution Remittance
Employer understands that amounts invested through the Trust are to be remitted directly
to the Trust in accordance with instructions provided to Employer by ICMA -RC and are
not to be remitted to ICMA -RC. In the event that any check or wire transfer is incorrectly
labeled or transferred to ICMA -RC, ICMA -RC may return it to Employer with proper
instructions.
9. Indemnification
ICMA -RC shall not be responsible for any acts or omissions of any person with respect
to the Plan or related Trust, other than ICMA -RC in connection with the administration
or operation of the Plan. Employer shall indemnify ICMA -RC against, and hold ICMA-
RC harmless from, any and all loss, damage, penalty, liability, cost, and expense,
including without limitation, reasonable attorney's fees, that may be incurred by, imposed
upon, or asserted against ICMA -RC by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or person
with respect to the Plan or related Trust, excepting only any and all loss, damage, penalty,
liability, cost or expense resulting from ICMA -RC's negligence, bad faith, or willful
misconduct.
10. Term
This Agreement shall be in effect and commence on the date all parties have signed and
executed this Agreement ("Inception Date "). The term of this Agreement will commence
on the Inception Date and extend five (5) years from that date. This Agreement will be
renewed automatically for each succeeding year unless written notice of termination is
provided by either party to the other no less than 60 days before the end of such
Agreement year. The Employer understands and agrees that, in the event the Employer
terminates this Agreement (or replaces the VantageTrust PLUS Fund as an investment
option in its investment line -up), ICMA -RC retains full discretion to release Plan assets
invested in the VantageTrust PLUS Fund in an orderly manner over a period of up to 12
months from the date ICMA -RC receives written notification from the Employer that it
has made a final and binding selection of a replacement for ICMA -RC as administrator of
the Plan (or a replacement investment option for the VantageTrust PLUS Fund).
11. Amendments and Adjustments
(a) This Agreement may be amended by written instrument signed by the parties.
(b) ICMA -RC may amend this agreement by providing 60 days' advance written
notice to the Employer prior to the effective date of such proposed amendment.
Such amendment shall become effective unless, within the 60 -day notice period,
the Employer notifies ICMA -RC in writing that it objects to such amendment.
(c) The parties agree that enhancements may be made to administrative and
operations services under this Agreement. The Employer will be notified of
Plan numbers 300934, 1 06564
enhancements through the Employer Bulletin, quarterly statements, electronic
messages or special mailings. Likewise, if there are any reductions in fees, these
will be announced through the Employer Bulletin, quarterly statement, electronic
or special mailing.
12. Notices
All notices required to be delivered under this Agreement shall be in writing and shall be
delivered, mailed, e- mailed or faxed to the location of the relevant party set forth below
or to such other address or to the attention of such other persons as such party may
hereafter specify by notice to the other party.
ICMA -RC: Legal Department, ICMA Retirement Corporation, 777
North Capitol Street, N.E., Suite 600, Washington, D.C., 20002 -4240
Facsimile; (202) 962 -4601
Employer: at the office set forth in the first paragraph hereof, or to any
other address, facsimile number or e-mail address designated by the
Employer to receive the same by written notice similarly given.
Each such notice, request or other communication shall be effective: (i) if given by
facsimile, when transmitted to the applicable facsimile number and there is appropriate
confirmation of receipt; (ii) if given by mail or e-mail, upon transmission to the
designated address with no indication that such address is invalid or incorrect; or (iii) if
given by any other means, when actually delivered at the aforesaid address.
13. Complete Agreement
This Agreement shall constitute the complete and full understanding and sole agreement
between ICMA -RC and Employer relating to the object of this Agreement and correctly
sets forth the complete rights, duties and obligations of each party to the other as of its
date. This Agreement supersedes all written and oral agreements, communications or
negotiations among the parties. Any prior agreements, promises, negotiations or
representations, verbal or otherwise, not expressly set forth in this Agreement are of no
force and effect.
14. Titles
The headings of Sections of this Agreement and the headings for each of the attached
schedules are for convenience only and do not define or limit the contents thereof.
15. Incorporation of Schedules
All Schedules (and any subsequent amendments thereto), attached hereto, and referenced
herein, are hereby incorporated within this Agreement as if set forth fully herein.
Plan numbers 300934, 106564
16. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the
State of California, applicable to contracts made in that jurisdiction without reference to
its conflicts of laws provisions.
In Witness Whereof, the parties hereto certify that they have read and understand this
Agreement and all Schedules attached hereto and have caused this Agreement to be
executed by their duly authorized officers as of the Inception Date first above written.
CITY OF ROSEMEAD
LM
Signature
Date
Name and Title (Please Print)
INTERNATIONAL CITY MANAGEMENT ASSOCIATION
RETIREMENT CORPORATION
By n,
An ela C. Montez �
Assistant Corporate Secretary
Please return fully executed contract to: New Business Unit
ICMA -RC
777 North Capitol Street NE
Suite 600
Washington DC 20002 -4240
10
Plan numbers 300934, 106564
Exhibit A
Administrative Services
The administrative services to be performed by ICMA -RC under this Agreement shall be
as follows:
(a) Participant enrollment services, including providing a welcome package and
enrollment kit containing instructions and notices necessary to implement
the Plan's administration. Employees will enroll online or through form.
ICMA -RC will provide an enrollment link through the general ICMA -RC
web site. Plan sponsor will also make available the online enrollment link in
their Intranet site or via email to new employees. Employer can also enroll
employees through EZLink.
(b) Establishment of participant accounts for each employee participating in the
Plan for whom ICMA -RC receives appropriate enrollment instructions.
ICMA -RC is not responsible for determining if such Plan participants are
eligible under the terms of the Plan.
(c) Allocation in accordance with participant directions received in good
order of individual participant accounts to investment funds offered under
the Trust. Participants can complete allocations through Investor Services,
Voice Response System or through Account Access, the secure participant
online system provided by ICMA -RC.
(d) Maintenance of individual accounts for participants reflecting amounts
deferred, income, gain or loss credited, and amounts distributed as
benefits.
(e) Maintenance of records for all participants for whom participant accounts
have been established. These files shall include enrollment instructions
(provided to ICMA -RC through Account Access, EZLink or form),
beneficiary designation instructions and all other documents concerning each
participant's account, and if applicable, records of any transaction conducted
through the Voice Response Unit ( "VRU "), Account Access or other
electronic means.
(f) Provision of periodic reports to the Employer through EZLink.
Participants will have access to account information through Investor
Services, Voice Response System, Account Access and through quarterly
statements that can be delivered electronically through Account Access or
by postal service.
(g) Communication to participants of information regarding their rights and
elections under the Plan.
(h) Making available Investor Services Representatives through a toll -free
telephone number from 8:30 a.m. to 9:00 p.m. Eastern Time, Monday
through Friday (excluding holidays and days on which the securities
11
Plan numbers 300934, 106564
markets or ICMA -RC are closed for business (including emergency
closings), to assist participants.
(i) Making available a toll -free number and access to VantageLine, ICMA -
RC's interactive VRU, and ICMA -RC's web site, to allow participants to
access certain account information and initiate plan transactions at any
time. Account access and VantageLine are normally available 24 hours a
day, seven days a week except during scheduled maintenance
periods designed to ensure high - quality performance. The scheduled
maintenance window is outlined at https : //hgWerl.icmarc.ory/lofzin.isp
(j) Distribution of benefits as agent for the Employer in accordance with
terms of the Plan. Participants who have separated from service can
request distributions through Account Access or via form.
(k) Upon approval by the Employer that a domestic relations order is an
acceptable qualified domestic relations order under the terms of the Plan,
ICMA -RC will establish a separate account record for the alternate payee
and provide for the investment and distribution of assets held thereunder.
(1) Loans may be made available on the terms specified in the Loan Guidelines,
if loans are adopted by the Employer. Participants can request loans through
Investor Services or Account Access.
(m) Guided Pathways — Participant Advice and Guidance may be made
available through a third party vendor on the terms specified on ICMA-
RC's website.
(n) ICMA -RC will determine appropriate delivery method (electronic and /or
print) for plan sponsor /participant communications and education based on
a number of factors (audience, effectiveness, etc.)
12