Employees taking advantage of the City’s deferred compensation benefit could see big changes toward the end of 2012.
In December, the Central Texas Deferred Compensation Pool’s Oversight Committee began the work of developing a single plan that will serve the employees of Williamson County and the cities of Round Rock and Georgetown.
Round Rock is banding together with the County and Georgetown to pool our collective employee deferred compensation retirement accounts. The hope is that the combined strength of those assets will improve the investment offerings available to employees and reduce the fees employees pay to the company that manages their accounts.
Combined, the more than 800 Round Rock city employees have invested slightly more than $7.5 million in deferred 457 plan investments. Combined with similar investments by employees at the City of Georgetown and Williamson County, the “buying power” of those pooled assets reaches about $18 million.
“Pooling our assets lets us get a better deal from the company that ultimately will handle the pool for employees from our three agencies,” said Rick White of the Police Department, who is chairman of the oversight committee.
Often, 457 plans are administered by a company that charges a variety of regular fees for administering accounts and may offer what are called proprietary funds, which are managed directly by the company and may result in additional fees or restrictions on how money in a proprietary fund can be moved to another company.
The plans for Round Rock and Williamson County have been administered by Nationwide Retirement Solutions for more than a decade, and Georgetown’s is managed by the International City/County Management Association.
This spring, the committee will begin working with a consultant to better understand the savings it may be able to achieve for employees who participate in deferred compensation. Later this year, the committee plans to seek proposals from a company to administer deferred compensation for the entire three-agency pool. After a new administrator company is on board, the committee’s role will then be to monitor and oversee how the plan is administered for employees to ensure that company continues to provide good value for those in the plan.
The committee members for Round Rock are Secretary Stacie Carter, Finance Department; Willie Tapia, Utilities Department; and Rick White. Committee alternates from Round Rock are Charles Dittman, Fire Department; Jessica Woods, Utilties Department; and Elaine Wilson, Finance Department.What is Deferred Comp?
Deferred compensation is a voluntary retirement plan in which an employee takes some of their pay and invests in the plan either before taxes are taken out or after taxes with a “Roth” option. The Internal Revenue Service calls the kind of plan available to city employees a “457” plan, and it works in much the same way as do the more commonly known 401(k) plans.
Deferred compensation is different from employee’s Texas Municipal Retirement System (TMRS) contributions in that 457 plans operate in addition to the TMRS pension plan. Also, the City does not match 457 contributions the way that the City does for TMRS.
“We understand that people are going to have a lot of questions about ‘what we are going to do with their money,'” White said. Questions, suggestions or comments can be emailed to email@example.com.
As the Oversight Committee continues to move forward, it will keep employees abreast of developments.
The committee’s meetings are open to the public, and the committee is taking steps to ensure its activities are completely open and committee materials are easily available to employees.
The committee meets at 1:30 p.m. on the second Monday of each month at the Williamson County Annex, 301 S.E. Inner Loop in Georgetown, in the Human Resources Training Room, Suite 108.