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HomeMy WebLinkAboutItem 05 Approval to Terminate the City’s 457 Contract with Principal Financial Services Effective December 30, 2018 ocoee florida AGENDA ITEM COVER SHEET Meeting Date: 11/20/2018 Item # 5 Reviewed By: Contact Name: Gene Williford, HR Director Department Director: Contact Number: (407) 905-3154 City Manager: - • Subject: Termination of the City's 457 Contract with Principal Financial Services effective December 30, 2018 Background Summary: Principal Financial Services has officially notified the City of Ocoee that it will no longer support the 457 Contract that it has for the City's employees. The City's other two 457 plan providers, Empower and ICMA, have informed the City that they will continue to support the plans and will allow employees to move their monies from Principal to either of them. Issue: Principal Financial Services, Inc. has notified the City that it will no longer support the City's plan document and that the City will be required to hire an outside plan provider for the plan document for any future amendments or legislative changes. In addition, Principal is increasing fees for employee services. Recommendations Terminate the City's 457 Contract with Principal Financial Services and allow employees to transfer their monies to either Empower or ICMA. Attachments: Emails from Principal Financial Services, Inc. Financial Impact: An outside provider would charge a minimum of$2,000.00 per administrative or legislative change to the plan. Type of Item: (please mark with an "x") Public Hearing For Clerk's Dept Use: Ordinance First Reading ic Consent Agenda Ordinance Second Reading Public Hearing Resolution Regular Agenda X Commission Approval Discussion& Direction Original Document/Contract Attached for Execution by City Clerk Original Document/Contract Held by Department for Execution Reviewed by City Attorney N/A Reviewed by Finance Dept. Lil N/A Reviewed by () N/A 2 Message Center Page 1 of 1 To: dbertling@ci.ocoee.fLus Received: 10/02/2018,03:47 PM CT Product: 456039 Expires: 02/04/2019, 12:00 AM CT Subject: Notice:Your organization's plan is now considered to be on an outside document We've sent a few reminders, and the time has finally come. Our Sept. 15, 2018 deadline to let us know how you'll proceed with your organization's custom plan document has passed. And since we didn't hear from you by this date, we'll update our records to reflect that you're working with an outside plan provider to maintain the plan document for any future amendments or legislative changes. As a reminder This means your new plan document provider will be responsible for providing any legislative or discretionary changes to the plan document, and the accompanying summary plan description. Please remember to send us a copy of any plan amendments/restatements prepared by your document provider, so we can update our records. Questions? It's very important that your plan document be maintained properly, so please reach out to your Principal® representative with any questions. The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements. Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, Iowa 50392. ©2018, Principal Financial Services, Inc. Securities offered through Principal Securities, Inc.,member SIPC https://secure02.principal.com/servleticommon/employer/messagecenter 10/3/2018 + . Message Center Page 1 of 2 To: dbertling@ci.ocoee.fl.us Received: 10/04/2018,07:46 AM CT Product: 456039 Expires: 02/06/2019, 12:00 AM CT Subject: Notification of Retirement Plan Fee Changes Seasons are changing and so are a few things here at Principal®! You may see several communications from us this month, keeping you in the know on upcoming changes. We are constantly evaluating our business, finding ways to provide the best experience for you and your participants. As we've focused on the best experience for your participants, we've made investments in this area and continue to do so. In order to help ensure the high level of service you expect, we are making some fee adjustments. This message is to inform you of participant transaction fee changes that will affect your organization's plan effective 1/1/2019. What's changing? These fee changes include adjusting fees on the following transaction-based' service(s). Fees will be collected in the collection method established for the plan, or as indicated differently below. Fees previously reported in a Retirement Plan Fee Summary (located under Administrative, then Fees) will change as outlined below. • Defined Contribution participant distributions (including in kind distributions if available under the plan): • A $50 fee will be incurred each time a distribution is processed. • An annual $50 fee (collected quarterly) will apply to new Installment elections, if available, under the plan. Fees will be deducted from the participant's account, unless you have established another collection method. • Loan set-up: • A $75 fee will apply to set-up a new plan loan. Next steps These changes take effect January 1, 2019. You have until December 1, 2018 to notify participants of the transactional fee changes affecting the plan. To help facilitate this notice process, you will receive a task on your To Do List when the notice is ready to send. Take advantage of our enhanced participant notice delivery option and have them sent electronically as an efficient way to deliver the participant notices. • For more information on providing email addresses to us, search "Participant email addresses" in the Help feature on principal.com. • For more information on electronic delivery of notices, see Electronic Delivery of Participant Disclosure Materials Please keep this notice of fee change with your other disclosure materials. As a reminder, we send communication regarding your retirement plan fees that need to go to the plan fiduciary here, in the Principal Message Centers^+. If you aren't the plan fiduciary or you haven't setup a plan fiduciary to get these messages, please contact us to help you do that. Or, you will need to ensure that the retirement plan fee disclosure information is given to the plan fiduciary. Questions? If you have any questions, please contact your Principal representative. https://secure02.principal.com/servlet/common/employer/messagecenter 10/4/2018 4. Message Center Page 2 of 2 'Transaction-based fees only apply if and when the service is used. Participants that do not use the service will not be charged. Insurance products and plan administrative services provided through Principal Life Insurance Co.. Securities offered through Principal Securities, Inc., 800-547-7754, member SIPC and/or independent broker-dealers. Principal Life, and Principal Securities are members of the Principal Financial Group®, Des Moines, Iowa 50392. © 2018 Principal Financial Services, Inc. 608457-092018 HZ2989 ©2018, Principal Financial Services, Inc. Securities offered through Principal Securities, Inc., member SI PC https://secure02.principal.com/servlet/common/employer/messagecenter 10/4/2018