An Executive Policy Establishing a Consolidated Deferred Compensation Board and Program
Document Code No.: PER 10-3 (AEP)
Department/Issuing Agency: Office of the Executive
Effective Date: December 27, 1995
Approved: /s/ Gary Locke
Type of Action: New
Signed document (PDF, 313 KB)
1.0 SUBJECT TITLE: An Executive Policy Establishing a Consolidated Deferred Compensation Board and Program
2.1 To establish a consolidated Deferred Compensation Board to replace the separate Boards previously appointed by the Executive Director of the Department of Metropolitan Services and the King County Executive.
3.0 ORGANIZATIONS AFFECTED:
All King County Executive Departments, Offices, and Divisions.
4.1 Internal Revenue Code Section 457 allows the County to provide a tax-deferred retirement savings program for its employees and other eligible participants.
4.2 Revised Code of Washington, Chapter 41.04 authorizes the County to establish a Plan allowing employees to defer a portion of their income and further authorizes the County to invest that income on behalf of the employees.
All words shall have their ordinary and usual meaning except those defined in this section which shall have in addition the meaning set forth below:
5.1 "Deferred Compensation": Pre-tax funds withheld from employees paycheck pursuant to Section 457 of the Internal Revenue Code allowing them to save and shelter a portion of their salaries from current federal taxation and to minimize future tax liability.
5.2 "Deferred Compensation Plan": A Plan provided by the employer allowing its employees the option of saving a portion of their pre-tax income in a retirement savings program.
6.1 King County is authorized under state and federal law to offer a deferred compensation plan to employees and other eligible participants for the purpose of encouraging employees to save for retirement.
6.2 Motion 1355 adopted by the King County Council on December 10, 1973 authorized the King County Executive to contract with agents for the purpose of providing an optional deferred compensation plan for employees of the County in accordance with Ch. 41.04 RCW and I.R.C. Section 457.
6.3 Executive Order #2038 dated January 3, 1974 established a deferred compensation plan and Executive Order #2065 dated December 29, 1976 established a deferred compensation committee for King County. These orders were repealed March 2, 1990 and not replaced.
6.4 A motion dated October 26, 1982 passed by the Finance/Personnel Committee of the Municipality of Metropolitan Seattle authorized Metro's Executive Director to enter into agreements and take actions necessary to implement a deferred compensation plan for its employees in accordance with I.R.C. Section 457 and Ch. 41.04 RCW.
6.5 An order dated October 28, 1982, signed by the Executive Director of Metro established a deferred compensation committee and authorized the committee to discharge responsibilities connected with the deferred compensation program.
6.6 The Department of Metropolitan Services will be fully integrated into King County effective January 1, 1996. That department has satisfactorily conducted a separate deferred compensation program that is comparable to King County's existing deferred compensation Plan.
6.7 The King County plan and Metro's plan function under the same Internal Revenue Code rules and can be consolidated.
6.8 Both the County and eligible participants benefit from a financially sound deferred compensation program.
6.9 The County recognizes that deferred compensation programs are an important voluntary retirement benefit for employees and must be conducted in a fiscally sound and responsible manner.
6.10 The County recognizes its fiduciary responsibility to participants, and will provide a consolidated deferred compensation program as a convenient way for participants to save and shelter a portion of their salaries from current federal taxation and to minimize future tax liability.
6.11 Assets in the 457 plan belong to the County as the employer in accordance with federal law until the assets are made available to the participant upon retirement or separation of service.
6.12 The County recognizes that the 457 account is operated by the County to provide benefits to the participants, not to be used by the County as a source of working capital.
6.13 The County will pay the deferred amounts adjusted by applicable earnings or losses to the participants as agreed upon retirement or separation.
6.14 The King County and Metro Deferred Compensation committees have jointly recommended an approach to merge the two committees and have proposed a consolidated structure.
6.15 A consolidated deferred compensation Board is created to replace the separate deferred compensation committees and to conduct the business for the County's consolidated deferred compensation program.
6.16 Executive Orders, Council Motions, or directions pertaining to and providing guidance to the King County or Metro deferred compensation committees are hereby superseded for the purpose of effecting consolidation of the current King County and Metro deferred compensation programs and disestablishing the two separate deferred compensation committees.
6.17 The consolidated Board will consist of nine voting members selected from the following County units:* County Executive
* County Council
* Human Resource Management
* Cash Management
* Retiree/Separated Employee Representative
* Three Employee Representatives.
6.18 The Board will be advised by ex officio members of the Board without voting power:* Deferred Compensation Plan Administrator
* Prosecuting Attorney's Office
* Others deemed necessary by the voting Board members.
6.19 To ensure continuity with the existing programs and to build on the experience already established, the nine voting-member consolidated Board for Fiscal Year 1996 will be appointed primarily from current members of the Metro and King County Deferred Compensation Committees, as listed on Attachment A to this Procedure. The initial Board members will serve from the effective date of this policy to December 31, 1996 and membership thereafter will be determined consistent with the Board's bylaws.
6.20 If an appointed member is unable or unwilling to serve on the Board, the Board may by majority vote, select a new voting member from the category represented by the resignee.
6.21 The Board will select a chair and a vice chair for 1996.
6.22 Effective January 1, 1997, voting representatives for the Consolidated Deferred Compensation Board will be selected from the County units identified in Section 8.1. The Board will establish procedures for selecting three employee representatives and one retiree/separated employee representative to encourage active and broad employee participation. Employees selected from this category should be the most qualified available from the pool of interested employee participants. Criteria for Board membership shall include, at a minimum, participation in the deferred compensation program, experience or interest in finance or investments, and the ability to participate actively on the Board and subcomniittees.
6.23 The Board will establish policies, procedures, and prepare by-laws to implement and conduct the deferred compensation program. The policies and procedures will be carried out by the staff assigned to support the program.
Operating procedures will be established by the Board and incorporated into by-laws as described in Section 8.
8.1 The Board will establish subcommittees responsible for advising the Board on matters including but not limited to plan design, investments, education/communication, and compliance/legal. Committees will include broad employee participant representation.
8.2 The new consolidated Board will select a chair and vice chair, prepare by-laws, keep regular records of its course of business, establish rules and procedures for implementation of the deferred compensation Board and program, and will conduct itself consistent with open public meeting rules, public disclosure laws, and the County code of ethics. The Board will comply with all applicable federal, state, and County laws and regulations.
8.3 The Board is authorized and directed to negotiate and recommend contract terms, perform or request audits, evaluate and select investment options, communicate with participants, encourage new participation, rule on employee requests arising out of the deferred compensation program, review and make changes to the plan consistent with Internal Revenue Code, communicate with state and federal legislative representatives as appropriate and generally make decisions on behalf of the County and plan participants pertaining to the consolidated deferred compensation program.
8.4 Contracts pertaining to the deferred compensation program on behalf of the County will be signed jointly by the chair of the deferred compensation committee and the Director of Human Resource Management.
8.5 The Board will provide financial status reports at least annually and more often if requested to the Director of Finance and to the Director of Human Resource Management.
8.6 The Board will assume fiduciary responsibility for the consolidated program on the effective date of this order.
This appendix is available from the Executive Office:
9.1 1996 Board Members