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City of Alexandria, VA City of Alexandria, VA
Finance
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Page updated Nov 7, 2013 10:42 AM
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457 Plan Participants - Watch for a Letter from ICMA-RC

If you are a participant in the City of Alexandria 457 Deferred Compensation Plan (457 Plan), please watch for a letter that ICMA-RC is mailing to participants around October 15.  The letter will provide details on a change in investment funds that will occur after 5:00 p.m. on November 15, 2013.  You are not required to take any action to complete this transition. 

Here are the links to the materials that ICMA-RC is mailing to all 457 Plan participants.

The following information on the new information funds was not available at the time ICMA-RC printed their materials for mailing to participants.

 

Change in Investment Funds 

In order to lower fees wherever possible, simplify the investment line-up, and expand the investment asset classes available to participants, the 457 Plan’s investment funds will change.  During the transition, which ICMA-RC will begin after 5:00 p.m. on Friday, November 15, and complete by 8:00 a.m. on Monday, November 18, participants’ money will be moved to similar funds in the new investment funds platform.  However, no changes will be made to the VT PLUS Fund which will be retained and will continue to be available for investment.  ICMA-RC informed the City that this change should cause little, if any, disruption to employees and their 457 accounts.  The change to the 457 Plan investment funds does not affect the investment funds for the Payroll Deduct Roth IRA.

Fees

Currently, ICMA-RC charges participants bundled fees to cover costs for the investment fund managers and for them, ICMA-RC, as the administrator.  Each participant is charged a fee that is a percentage of their account balance (a percentage based fee).  Participants may not be aware of the percentage based fees because in the past they were deducted out of the earnings prior to being allocated to individual participant accounts.

In order to negotiate lower fees, the City was able to have ICMA-RC change how the fees are charged.  The new fee structure will include the percentage based fee for the investment fund managers plus a flat administrative fee for ICMA-RC.  The annual administrative fee will be $73.00 which will be subtracted from accounts on a quarterly basis.  The administrative fee will appear on future quarterly statements.  Over the long term, most participants will find the administrative costs will be lower.

After the November 15 – 18 change, most of the investment funds will be index funds which typically charge lower percentage based fund manager fees than the fees charged for comparable actively managed funds.  The percentage based fund manager fee will continue to be deducted prior to earnings being allocated to participants’ individual accounts.  The fund manager fees will not appear on quarterly statements but can be found in fee disclosure documents on the ICMA-RC web site, www.icmarc.org. The fees for the new index funds will not appear on the ICMA-RC web site until after November 18.

Fee Savings 

Staff from the Pension Administration Division prepared an analysis comparing total current participant fees to the new fees being implemented in November 2013.  The 457 Deferred Compensation Plan participants will experience an average savings of approximately $300 per year, which is a 52.77% reduction in fees.  Participant savings will vary based on account size and asset mix.   Over time, the average participant will have lower fees.  The City does not pay any fees on these accounts, so there will be no fee savings realized by the City. All savings will benefit the plan participants. 

Note for Firefighters and Police Officers Employed Before 2004 

If you were employed by the City prior to 2004 as a Firefighter or Police Officer, you may receive a second letter.  ICMA-RC will also mail letters to participants who still have account balances in the Retirement Income Plan for Firefighters and Police Officers (RIP).  RIP accounts are currently at Prudential, but they will move to ICMA-RC after November 6.  Be sure to also read the second letter if you have a RIP account.

Information Sessions 

The Finance Department Pension Administration will visit locations around the City from October 23 to November 8 to provide a short presentation and answer questions on the change to the 457 Plan investment funds.  A schedule of information sessions appears at the end of this page.

If You Don’t Receive Packet by October 28 

If you do not receive a letter from ICMA-RC by October 28 regarding your 457 Plan account or your RIP account, please email by clicking here or call 703.746.3887.

FAQ: Changes to the City's 457 Deferred Compensation Plan 

Schedule of Information Sessions 

Date 

Time 

Location 

Wednesday, October 23

9:30 a.m. – 10:30 a.m.

Lee Center

Gold Rooms 1 and 2

1108 Jefferson Street

Thursday, October 24

9:30 a.m. – 10:30 a.m.

Lee Center

Kauffman Auditorium

1108 Jefferson Street

Monday, October 28    

10:00 a.m. - 12:00 pm.

Department of Community and

Human Services

Large Conference Room - 4th Floor

720 North St. Asaph Street

Tuesday, October 29

9:30 a.m. – 10:30 a.m.

Lee Center

Gold Rooms 1 and 2

1108 Jefferson Street

3:30 p.m. – 4:30 p.m.

Police Department

Community Room

3600 Wheeler Avenue

Wednesday, October 30

10:00 a.m. – 11:00 a.m.

City Hall

Sister Cities 1101

301 King Street

Thursday, October 31

11:00 a.m. – 12:00 p.m.

Police Department

Community Room

3600 Wheeler Avenue

Monday, November 4

1:00 p.m. – 3:00 p.m.

Department of Community and

Human Services

First Floor

Multipurpose Rooms 1 and 2

2525 Mt. Vernon Avenue

Tuesday, November 5

10:20 a.m. - 12:00 p.m.

Charles Houston Recreation Center

Multipurpose Room

901 Wythe Street

Wednesday, November 6

12:30 p.m. – 2:30 p.m.

Charles E. Beatley, Jr.

Central Library

Large Meeting Room

First Floor

5005 Duke Street

                   Thursday, November 7

10:30 a.m. - 12:00 p.m.

Department of Community

and Human Services

Room 514

4480 King Street

4:00 p.m. – 4:30 p.m.

Transportation & Environmental Services

BCD Training Room

2900-B Business Center Drive

 

 

 

 

301 King St.
Alexandria, VA 22314
703.746.3900
Fax: 703.838.4987
E-mail

Office Hours:
Monday - Friday
8 a.m. - 5 p.m.