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File #: 21-512    Version: 1 Name: Amendment to City of San Leandro 457(b) Deferred Compensation Plan
Type: Staff Report Status: Filed
In control: City Council
Meeting Date: 9/7/2021 Final action: 9/7/2021
Enactment date: Enactment #:
Title: City of San Leandro City Council Resolution Authorizing the Amendment and Restatement of the City of San Leandro 457(b) Deferred Compensation Plan to Include the Roth Contribution Option
Sponsors: Susan Hsieh Finance Director
Attachments: 1. Amended City of San Leandro 457(b) Deferred Compensation Plan – Effective September 1, 2021
Title
City of San Leandro City Council Resolution Authorizing the Amendment and Restatement of the City of San Leandro 457(b) Deferred Compensation Plan to Include the Roth Contribution Option

Staffreport
SUMMARY AND RECOMMENDATIONS

Staff recommends that the City Council adopt a resolution authorizing the amendment and restatement of the City of San Leandro 457(b) Deferred Compensation Plan to reflect the addition of the Roth Contribution option.

BACKGROUND

The City established a Deferred Compensation Plan ("Plan") in 1983. The Plan has been amended and restated to comply with legislative changes over the years. As stated in the plan document, "the primary purpose of this Plan is to permit Employees of the Employer to enter into an agreement which will provide for deferral of payment of a portion of his or her current compensation until death, retirement, severance from employment, or other event, in accordance with the provisions of the Code Section 457(b), with other applicable provisions of the Code, and in accordance with the General Statutes of the State."

The plan document must be amended to include the Roth option stated above. In the 457(b) Governmental Deferred Compensation Plan, City employees are allowed to make pre-tax contributions into individual retirement accounts. With the Roth Contribution option, employees may elect to make after-tax contributions into individual retirement accounts. When using the Roth option, plan participants contribute to their retirement accounts with after-tax dollars, and their contributions and any investment earnings grow tax-free. The money they withdraw from a Roth account at retirement is tax-free income, provided they are 591/2 or older and held their account for at least five years.

Please note that this new option is not an additional benefit to employees, but it will provide employees the flexibility to diversify their retirement savings into pre-tax and after-tax accounts.

The amendment to the Pl...

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