REPORT TO THE CITY COUNCIL
October 9, 2014
FROM: DEFERRED COMPENSATION BOARD
BY: STANLEY L. MCDIVITT, Retirement Administrator
SUBJECT
Title
Adopt amendments to The City Of Fresno Deferred Compensation Plan document to allow for Roth Contributions and Roth In-Plan Rollover Conversions, update limits on deferrals, and Section concerning qualified military service
Body
RECOMMENDATION
The City of Fresno Deferred Compensation Board recommends that the City Council approve the attached City of Fresno Deferred Compensation Plan Document adding the Roth provisions allowed by the American Taxpayer Relief Act (ATRA) of 2012, qualified military service provisions of Pension Protection Act (PPA) of 2006 and updating deferral limits.
EXECUTIVE SUMMARY
The City of Fresno Deferred Compensation Plan document has been modified to incorporate the necessary language to 1) add Roth Contributions as a deferral type, including provisions for the Roth In-Plan Conversion enabling Fidelity, the plan's current record keeper custodian, to implement these provisions approximately 12-weeks following receipt of the amended Plan document; 2) update deferral limits, and 3) add a section on Qualified Military Service.
BACKGROUND
ATRA contains an important provision that offers a new opportunity to convert assets in defined contribution plans (such as Section 401(k) plans, Section 403(b) plans, and governmental 457(b) plans) into Roth amounts within the plan, regardless of whether the amounts are currently distributable, as long as the plan permits regular non-rollover Roth contributions. The amount converted is currently taxable but subsequent qualified distributions from the plan Roth account are, of course, completely nontaxable. Plans are permitted to offer this new conversion election but are, of course, not required to do so.
This opens up a potential source of assets for conversion to Roth. The new provision would allow all vested assets in...
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