06. Deferred Comp PlanHUMAN RESOURCES
CUPERTINO
Agenda Item No.
SUBJECT AND ISSUE
SUMMARY
Meeting Date: January 8, 2008
Adopt resolutions amending Cupertino 457 deferred compensation plans to permit employee loans
and self-managed accounts, Resolutions No. 08- 06 and No. 08- Q~.S'.
BACKGROUND
Cupertino offers employees three deferred compensation plans through Ca1PERS, ICMA and
Nationwide. These plans offer a loan program in which employees repay the principal and interest
to their own 457 accounts rather than to a lending institution. Key features of the program are
described below:
• Employees can borrow up to 50% of their account balance not to exceed $50,000.
• Maximum loan term is 5 years.
• Interest is charged at the prime rate plus 0.5% to 1 %, depending on the plan.
• The principal and interest are repaid to the employee's own 457 account.
• A one time initiation fee of $50 plus an annual fee of $35 to $50 depending on the plan.
Staff is also recommending the activation of aself-managed account option in the CaIPERS 457
plan. This option allows employees to invest in CD's, a much wider selection of mutual funds and
individual stocks. To participate in Ca1PERS self managed accounts, employees must assume full
fiduciary responsibility.
FISCAL IMPACT: There is no fiscal impact to the City as employees incur associated costs.
RECOMMENDATION
Staff recommends that the City Council adopt: (1) Resolution No. 08-~ to permit 457 plan
employee loans, and (2) Resolution No. 08-_~authorizing Ca1PERS 457 self-managed
accounts.
Submitted by:
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Sandy Abe
Human Resources Director
CITY HALL
10300 TORRE AVENUE • CUPERTINO, GA 95014-3255
TELEPHONE: (408) 777-3227 • FAX: (408) 777-3109
Approved by:
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David W. Knapp
City Manager s - ~
DRAFT
RESOLUTION 08-004
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
AUTHORIZING 457 DEFERRED COMPENSATION EMPLOYEE LOANS
WHEREAS, the City of Cupertino offers 457 deferred compensation plans to assist
employees in preparing for their retirement security; and
WHEREAS, the City of Cupertino offers 457 plans through Nationwide Retirement
Solutions, CaIPERS 457, and ICMA Retirement Corporation; and
WHEREAS providing employees with a loan option in which they repay the principal and
interest to their own 457 accounts serves the objective of assisting employees in their retirement
planning;
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Cupertino that
the City's current 457 deferred compensation plans will permit employee loans.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino
this 8th day of January, 2008 by the following vote:
Vote Members of the City Council
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: APPROVED:
City Clerk Mayor, City of Cupertino
s-z
RESOLUTION d8-005
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
AUTHORIZING CALPERS 457 SELF-MANAGED ACCOUNTS
WHEREAS, the .City of Cupertino offers 457 deferred compensation plans to assist
employees in preparing for their retirement security; and
WHEREAS the self-managed account option through CaIPERS 457 provides employees with
greater investment choices including CD's, a wider selection of mutual funds and individual
stocks; and
WHEREAS all fiduciary responsibility associated with Ca1PERS 457 self-managed accounts
is assumed by participating employees; and
WHEREAS providing greater investment options through Ca1PERS 457 serves the objective
of assisting employees in their retirement planning without increasing City fiduciary
responsibility;
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Cupertino that
the CaIPERS 457 deferred compensation plan will permit self-managed accounts.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino
this 8th day of January 2008 by the following vote:
Vote Members of the City Council
AYES:
NOES:
ABSENT:
ABSTAIN
ATTEST: APPROVED:
City Clerk Mayor, City of Cupertino
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