P.O. Drawer 140, 100 Central Circle

Low Moor, VA24457

540-863-1800†††† 540-863-1804 fax

 

 

DATE:†† August 25, 2015†††

 

ACTION ITEM

 

SUBJECT

VRS 403(b) Option Resolution

RATIONALE

The 2015 Virginia General Assembly approved legislation that allows school divisions to create employer-sponsored 403(b) plans for mandatory and voluntary employee contributions to the Hybrid Retirement Plan in lieu of participating in the VRS Hybrid 457 Deferred Compensation Plan that is currently provided for such contributions. Should the school division opt to create an employer-sponsored hybrid 403(b) plan, we would assume some fiduciary responsibilities we do not currently have with the 457 plan. The legislation does not spell out what these fiduciary responsibilities are and VRS recommends that school divisions considering such seek legal counsel. VRS also notes that the investment management fees that plan participants incur will likely be higher with a 403(b) employer sponsored plan than they are with the current VRS 457 plan. Finally, we do not have the investment management expertise on our staff to effectively oversee a 403(b) program and the investments contained therein whereas VRS does.

ESTIMATED COSTS

$2,000 annually for legal and benefits consulting fees

BUDGET CATEGORY

Legal Services and Professional Services

LEGAL REFERENCE

N/A

STAFF CONTACTS

Eugene Kotulka and/or Keven Rice

SUPERINTENDENTíS

RECOMMENDATION

Recommends the approval of the resolution to not offer the employer-sponsored 403(b) plan for hybrid employees and to continue participation in the 457 plan.

 

VRS 403(b) Option Resolution