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Agenda 07/08/2014 Item #16E 67/8/2014 16.E.6. EXECUTIVE SUMMARY Recommendation to approve and authorize the Chairman to execute a Resolution approving the 457 Roth after -tax contributions option with ICMA -RC and Nationwide Retirement Solutions, Inc. (NRS) 457 Plan Agreement for the Board of Collier County Commissioners and Supervisor of Elections and designate the County Manager to be the Official Plan Coordinator. OBJECTIVE: To gain approval on the 457 Roth after -tax contributions option to the existing agreements with ICMA -RC and NRS, allowing employees an additional resource for retirement savings. CONSIDERATIONS: The County currently provides employees with the opportunity to save for their retirement through a deferred compensation plan offered by ICMA -RC and NRS. This plan is commonly known as a "457 plan" to cite the section of the IRS code that provides for the offering of such a plan. The Small Business Jobs Act of 2010 permits government 457 plans to adopt provisions to establish Roth elective deferral accounts that accept after -tax contributions via payroll deductions. Adoption of these plans will provide an additional resource for County and Constitutional employees' retirement planning. FISCAL IMPACT: This action will have no fiscal impact to the County. LEGAL CONSIDERATIONS: This item has been approved as to form and legality and requires majority vote for approval. — CMG GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this Executive Summary. RECOMMENDATION: That the Board of County Commissioners approves and authorizes the Chairman to execute the Resolution approving the 457 Roth after -tax contributions option in Collier County's agreements with ICMA -RC and Nationwide Retirement Solutions, Inc. and designates the County Manager to be the Official Plan Coordinator. Prepared By: Ofelia Tallon, Manager Compensation, Department of Human Resources Attachments: 1. Resolution 2. Exhibit 1, ICMA Statement of Intent to Add Roth Provisions to ICMA -RC's 457 Governmental Deferred Compensation Plan & Trust 3. Exhibit 2, Nationwide Retirement Solutions, Roth Contribution Amendment to the Deferred Compensation Plan for Public Employees, 457 Governmental Plan and Trust 4. Exhibit 3, ICMA -RC 457 Deferred Compensation Plan & Trust Amendment to Add Roth Provisions 5. Exhibit 4, ICMA -RC 457 Plan Roth Provisions, Question and Answers Packet Page -1754- 7/8/2014 16.E.6. COLLIER COUNTY Board of County Commissioners Item Number: 16.16.E.16.E.6. Item Summary: Recommendation to approve and authorize the Chairman to execute a Resolution approving the 457 Roth after -tax contributions option with ICMA -RC and Nationwide Retirement Solutions, Inc. (NRS) 457 Plan Agreement for the Board of Collier County Commissioners and Supervisor of Elections and designate the County Manager to be the Official Plan Coordinator. Meeting Date: 7/8/2014 Prepared By Name: TallonOfelia Title: Manager - Compensation, Human Resources 6/10/2014 3:31:10 PM Submitted by Title: Manager - Compensation, Human Resources Name: TallonOfelia 6/10/2014 3:31:11 PM Approved By Name: LybergAmy Title: Director - Human Resources, Human Resources Date: 6/12/2014 12:14:13 PM Name: PriceLen Title: Administrator - Administrative Services, Administrative Services Division Date: 6/12/2014 3:36:38 PM Name: PriceLen Title: Administrator - Administrative Services, Administrative Services Division Date: 6/12/2014 4:18:52 PM Name: GreeneColleen Title: Assistant County Attorney, CAO General Services Packet Page -1755- Date: 6/16/2014 2:46:37 PM Name: KlatzkowJeff Title: County Attorney, Date: 6/16/2014 3:23:56 PM 7/8/2014 16.E.6. Name: KimbleSherry Title: Management/Budget Analyst, Senior, Office of Management & Budget Date: 6/20/2014 4:15:23 PM Name: OchsLeo Title: County Manager, County Managers Office Date: 6/30/2014 1:31:15 PM Packet Page -1756- 7/8/2014 16.E.6. RESOLUTION NO. 2014- A RESOLUTION APPROVING THE ADDITION OF AN AFTER -TAX ROTH CONTRIBUTIONS OPTION TO THE 457 PLAN AGREEMENTS WITH ICMA -RC AND NATIONWIDE RETIREMENT SOLUTIONS, INC. WHEREAS, Collier County Government desires to be an employer of excellence; and WHEREAS, Collier County Government has employees rendering valuable services; and WHEREAS, the addition of a ROTH option to existing 457 plans will provide Collier County an additional resource to attract, retain and motivate employees; and WHEREAS, the Human Resources Department recommends adding the ROTH contributions option to the 457 Plan Agreement with ICMA -RC and Nationwide Retirement Solutions, Inc., for the benefit of all employees under the Board of County Commissioners of Collier County Government and Supervisor of Elections; and WHEREAS, the option will provide the Collier County employees an additional resource and flexibility in their retirement planning; NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA that: The Collier County Board of County Commissioners approves amending its Agreement with Nationwide Retirement Solutions, Inc. and ICMA -RC plans to permit the 457 Roth after - tax contribution option through payroll deductions. ATTEST: BOARD OF COUNTY COMMISSIONERS DWIGHT E. BROCK, CLERK COLLIER COUNTY, FLORIDA, , Deputy Clerk proved as to form and legality: (olleen M. Greene Assistant County Attorney am TOM HENNING, CHAIRMAN Packet Page -1757- 7/8/2014 STATEMENT OF INTENT TO ADD ROTH PROVISIONS TO ICMA -RC's 457 GOVERNMENTAL DEFERRED COMPENSATION PLAN & TRUST Plan Number: 30511 .2 1 Fol M Name of Employer: 13OAg1) Djr (Di- i elR &1-'4) Z:V (0Ve417^'fA1 T State: I. Employer Intention The Employer intends to offer the Roth Provisions described in the ICMMA Retirement Corporation Governmental 457 Deferred Compensation Amendment to Add Roth Provisions, which added Article X to the ICMA -RC 457 Governmental Deferred Compensation Plan & Trust ( "ICMA -RC Roth Amendment "). II. Employer Instructions Regarding Plan Administration The Employer instructs ICMA -RC to begin administering the Roth Provisions as of the Effective Date of this statement of intent. IIl. Effective Date This statement of intent shall be effective as of the date when ICMA -RC advises that the Roth Provisions are operational or the date specified below, wbiebever is later. (date) I V. Employer Signature NAME OF OFFICIAL PLAN COORDINATOR (PLEASE PRINT): ,4eo C. 0CAlSjS2. SIGNATURE: TITLE: t--r/ UJt� /" JQ.AI G� e 4 TELEPHONE NUMBER: -7-3� 2 — • �M- DATE: EMAIL ADDRESS' 4 e G ✓Ch ✓ iP L'Ypi LY. J Ci 7/8/2014 16.E.6. ROTH CONTRIBUTION AMENDMENT TO THE DEFERRED COMPENSATION PLAN FOR PUBLIC EMPLOYEES 457 GOVERNMENTAL PLAN AND TRUST PREAMBLE 1.1 Adoption and effective date of amendment. The Employer adopts this Amendment to reflect Code Section 402A, as amended by the Small Business Jobs Act of 2010 ( "SBJA "). This Amendment is intended as good faith compliance with the requirements of Code Section 402A and guidance issued thereunder, and this Amendment shall be interpreted in a manner consistent with such guidance. This Amendment shall be effective as of the date selected below. 1.2 Eligible governmental 457 plan. The Employer is an eligible employer as defined in Code §457(e)(l)(A). 1.3 Supersession of inconsistent provisions. This Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Amendment. ARTICLE II ADOPTION AGREEMENT ELECTIONS 2.1 Effective Date. Designated Roth Contributions are permitted under the Plan as of the date this Amendment is executed below, which is no earlier than January 1, 2011. . 2.2 Unforeseeable emergency. If the Plan permits distributions of Elective Deferrals on account of an unforeseeable emergency, Designated Roth Contributions may be withdrawn on account of an unforeseeable emergency subject to the same qualifications that apply to Pre -tax Elective Deferrals. ARTICLE III DESIGNATED ROTH CONTRIBUTIONS 3.1 Designated Roth Contributions are permitted. The Plan's definitions and terms shall be amended as follows to allow for Designated Roth Contributions as of the Effective Date. Designated Roth Contributions shall be treated in the same manner as Deferral Contributions for all Plan purposes except as provided in Article II of this amendment. The Employer may, in operation, implement deferral election procedures provided such procedures are communicated to Participants and permit Participants to modify their elections at least once each Plan Year. 3.2 Deferral Contributions. The Plan's definition of Deferral Contributions at Section 1.08 is deleted and replaced as follows: "Deferral Contributions" means Salary Reduction Contributions, Nonelective Contributions, Matching Contributions and Designated Roth Contributions. The Employer or the Administrative Services Provider (if applicable) in applying the Code § 457(b) limit will take into account Deferral Contributions in the Taxable Year in which contributed. The Employer or Administrative Services Provider (if applicable) in determining the amount of a Participant's Deferral Contributions disregards the net income, gain and loss attributable to Deferral Contributions. 3.3 Salary Reduction Contributions. The Plan's definition of Salary Reduction Contributions at Section 1.27 is deleted and replaced as follows: "Salary Reduction Contributions " means a Participant's Elective Deferrals which are not includible in the Participant's gross income at the time deferred and have been irrevocably designated as Salary Reduction Contributions by the Participant in his or her Courtesy of Nationwide Retirement Solutions, Inc. Roth Amendment Page 1 of 3 CV. Packet Page -1759- 7/8/2014 16.E.6. deferral election. A Participant's Salary Reduction Contributions'-will be separately accounted for, as will net income, gain or loss, attributable to those Salary Reduction Contributions. All Deferral Contributions prior to this amendment are Salary Reduction Contributions. 3.4 Designated Roth Contributions. "Designated Roth Contributions" means a Participant's Deferral Contributions that are includible in the Participant's gross income at the time deferred and have been irrevocably designated as Designated Roth Contributions by the Participant in his or her deferral election. A Participant's Designated Roth Contributions will be separately accounted for, as will gains and losses attributable to those Designated Roth Contributions. However, forfeitures may not be allocated to such account. The Plan must also maintain a record of a Participant's investment in the contract (i.e., designated Roth contributions that have not been distributed) and the year in which the Participant first made a Designated Roth Contribution. 3.5 Distribution Rule. Withdrawals (including, but not limited to, withdrawals on account of an unforeseeable emergency) from Participant's accounts may be directed by the Participant from either Salary Reduction Contributions, Designated Roth Contributions or pro rata from Salary Reduction Contributions and Designated Roth Contributions.' 3.6 Corrective distributions attributable to Designated Roth Contributions. For any Plan Year in which a Participant may make both Designated Roth Contributions and Salary Reduction Contributions, the corrective distribution from the Participant's accounts will be taken pro rata from a Participant's Salary Reduction Contributions and Designated Roth Contributions. Furthermore, such procedure may permit the Participant to elect which type of Deferral Contributions shall be distributed first. 3.7 Loans. If Participant loans are permitted under the Plan, the loan policy or program is amended to provide the ability by a Participant to borrow from, or use as security, a Participant's Designated Roth Contribution account. Additionally, the loan policy or program is modified to provide that, with respect to the default of a loan which is attributable to Salary Reduction Contributions and Designated Roth Contributions, such default will be attributed to the Participant's Salary Reduction Contribution and Designated Roth Contribution accounts on a pro rata basis. 3.8 Rollovers. A direct rollover of a distribution from Designated Roth Contributions shall only be made to a Plan which includes Designated Roth Contributions as described in Code Section 402A(exl) or to a Roth IRA as described in Code Section 408A, and only to the extent the rollover is permitted under the rules of Code Section 402(c). 3.8.1 The Plan shall accept a rollover contribution of Designated Roth Contributions only if it is a direct rollover from another Plan which permits Designated Roth Contributions as described in Code Section 402A(e)(1) and only to the extent the rollover is permitted under the rules of Code Section 402(c), The Employer, operationally and on a uniform and nondiscriminatory basis, may decide whether to accept any such rowers. 3.8.2 The Plan shall not provide for a direct rollover (including an automatic rollover) for distributions from a Participant's Designated Roth Contribution account if the amount of the distributions that are eligible rollover distributions are reasonably expected to total less than 5200 during a year. In addition, any distribution from a Participant's Designated Roth Contributions are not taken into account in determining whether distributions from a Participant's other accounts are reasonably expected to total less than $200 during a year. Furthermore, the Plan will treat a Participant's Designated Roth Contribution account and the Participant's other accounts as held under two separate plans for purposes of applying the automatic rollover rules. However, eligible rollover Courtesy ofNationwide Retirement Solutions, Inc. Roth Amendment Page 2 of 3 M Packet Page -1760- 7/8/2014 16.E.6. distributions of a Participants Designated Roth Contributions are taken into account in determining whether the total amount of the Participant's account balances under the Plan exceed the Plan's limits for purposes of mandatory distributions from the Plan. 3.9 Operational Compliance. The Plan and the Administrative Services Provider will administer Designated Roth Contributions in good faith with applicable regulations or other binding authority not reflected in this amendment Any applicable regulations or other binding authority shall supersede any contrary provisions of this Amendment This Amendment has been executed and effective this day of 120 By: _ Signature Lt e- Of—* 5.4 v'R . Title: Name of Plan_ 6aaRh OF tt0 w4 6CY. Plan Number: _4 34 73 co O I Approved as to form and legality Assistant County Attorney Courtesy of Nationwide Retirement Solutions,.Inc. Roth Amendment Packet Page -1761- Page 3 of3 7/8/2014 16.E.6. 1CMA RETIREMENT CORPORATION GOVERNMENTAL 457 DEFERRED COMPENSATION PLAN & TRUST AMENDMENT TO ADD ROTH PROVISIONS Pursuant to Article XII of the ICMA Retirement Corporation 457 Governmental Deferred Compensation Plan & Trust (the "Plan"), the Plan is hereby amended to add a new Article X regarding Roth contributions. If the Employer affirmatively elects to allow Roth Elective Deferrals and In -Plan Roth Conversions, the provisions of this Amendment shall be effective for Participants as of [the date when ICMA -RC advises that the Roth Provisions are operational] or the date specified by the Employer in the Statement of Intent to Add Roth Provisions to a ICMA -RC 457 Governmental Deferred Compensation Plan c� Trust, whichever is later. If no election is made by the Employer, the provisions of this section will not be available to Participants. FIRST The following is hereby added as a new Article X to the Plan document as follows: X. ROTH PROVISIONS — This Article X has no effect unless and until the Employer affirmatively elects to permit Roth Elective Deferrals. 10.01 Definitions (a) Designated Roth Account. A bookkeeping account established and maintained to record the Participant's Roth Elective Deferrals, In -Plan Roth Conversions, rollovers from designated Roth accounts under other eligible retirement plans, and the income gains and losses thereon. Unless specifically stated otherwise, all references in the Plan to a Participant's Account shall include a Participant's Designated Roth Account. (b) In -Plan Roth Conversion. A distribution from a Participant's Pre -Tax Account that is rolled over to the Participant's Designated Roth Account under the Plan, pursuant to Code section 402A(c)(4). Notwithstanding anything herein to the contrary, an amount is not eligible for an In -Plan Roth Conversion unless it is distributable under the terms of the Plan and such distribution is an eligible rollover distribution within the meaning of Code section 402(c)(4). (c) Pre -Tax Account. A bookkeeping account established and maintained to record the portion of the Participant's Account attributable to amounts other than Roth Elective Deferrals, In -Plan Roth Conversions, rollovers from designated Roth accounts under other eligible retirement plans, and the income gains and losses thereon. Unless specifically stated otherwise, all references in the Plan to a Participant's Account shall include a Participant's Pre -Tax Account. (d) Qualified Roth Contribution Program. A program described in paragraph (1) of Code section 402A(b), under which a Participant may make Roth Elective Deferrals in lieu of all or a portion of the elective deferrals the Participant is otherwise eligible to make under the Plan. (e) Roth Elective Deferral. Deferred Compensation contributed pursuant to Section 10.02 by a Participant, which amounts are: (i) designated irrevocably by the Participant at the time of the deferral as a Roth elective deferral that is being made in lieu of all or a portion of the pre -tax elective deferrals the Participant is otherwise eligible to make under the Plan; and (ii) treated by the Employer as includible in the Participant's income at the time the Participant otherwise would have received that amount as Includible Compensation. 10.02 Permitted Roth Elective Deferrals (a) As of the effective date of this Article, a Participant shall be permitted to make Roth Elective Deferrals from his or her Includible Compensation in such amount or percentage as may be specified in the Joinder Agreement. A Participant's Roth Elective Deferrals will be allocated to a Designated Roth Account maintained for such deferrals. (b) Unless specifically stated otherwise, Roth Elective Deferrals will be treated as Deferred Compensation for all purposes under the Plan. Packet Page -1762- 7/8/2014 16.E.6. 10.03 Separate Accotmting (a) Contributions and withdrawals of Roth Elective Deferrals, In -Plan Roth Conversions and rollovers from a designated Roth account under an eligible retirement plan will be credited and debited to a Participant's Designated Roth Account. (b) The Plan will maintain a record of the amount of Roth Elective Deferrals, In -Plan Roth Conversions, and rollovers from a designated Roth account under an eligible retirement plan in each Participant's Designated Roth Account. (c) Gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to each Participant's Designated Roth Account and the Pre -Tax Account under the Plan. (d) No contributions other than Roth Elective Deferrals, In -Plan Roth Conversions, and rollovers from a designated Roth account under an eligible retirement plan and properly attributable income gains and losses thereon will be credited to a Participant's Designated Roth Account. 10.04 Direct Rollovers (a) Notwithstanding anything to the contrary in the Plan, a direct rollover of a distribution from a Designated Roth Account under the Plan shall be made only to another designated Roth account under an eligible retirement plan or to a Roth IRA described in section 408A of the Code, and only to the extent the rollover is permitted under the rules of section 402(c) of the Code. (b) Notwithstan ding anything to the contrary in the Plan, the Plan will accept a rollover contribution to a Designated Roth Account only if it is a direct rollover from another designated Roth account under an eligible retirement plan, or if the rollover is an In -Plan Roth Conversion defined in section 10.05 of this document. (c) Eligible rollover distributions from a Participant's Designated Roth Account are taken into account in determining whether the total amount of the Participant's Account under the Plan exceeds $1,000 for purposes of mandatory distributions from the Plan. 10.05 In -Plan Roth Conversion. Unless otherwise elected by the Employer, as of the effective date of this Article the Plan shall allow for In -Plan Roth Conversions. (a) Tax Treatment. 'The amount of an In -Plan Roth Conversion shall be includible in the Participant's gross income, as though it were not part of a qualified rollover contribution. (b) Irrevocability. Any election made by the Participant pursuant to Section 10.05(a) shall be irrevocable. (c) Treatment of Loans. Outstanding plan loans shall be excluded from In -Plan Roth Conversions. Notwithstanding anything herein to the contrary, an In -Plan Roth Conversion shall not accelerate or otherwise cause a Participant to default on an outstanding plan loan. 10.06 Availability of Loans from Designated Roth Accounts. A participant's Designated Roth Account balance can be included to determine a Participant loan amount under Article VIII. However, unless the Employer elects otherwise, Designated Roth Accounts will not be available as a source for loans under the Plan. SECOND Former Articles X through XIV of the Plan document are hereby re- numbered XI through XV to reflect the addition of the Roth Provisions. EM Packet Page -1763- 7/8/2014 16.E.6. 'NEWROTH' e Note. If you wish to make this provision available, your plan 1. What are Roth deferrals? must also allow for Roth deferrals. The new Roth elective deferral provision allows participants to make Roth (after -tax) deferrals to your existing ICMA -RC 457 plan. Roth deferrals and associated earnings can be withdrawn tax -free if certain criteria are met. ICMA -RC will provide separate accounting for Roth assets within participant accounts. 2. When can Roth assets (Le., Roth deferrals and associated earnings) be withdrawn tax -free? In order for Roth deferrals and associated earnings to be withdrawn tax -free, the requirements for a "qualified distribution" must be met. Distributions of Roth•assers arc qualified if • a period of five taxable years has passed since January I of the year of the participant's first Roth deferral; and • at least one of the following also applies: o the participant is at least 59'h years old; • the participant is disabled; or • the funds are being paid to the participant's beneficiary. 3. What if the requirements for a qualified distribution of Roth assets are not met? The Roth deferrals can be withdrawn tax free, but the earnings portion of the distribution will be taxable as income and may also be subject to a 10 percent early withdrawal penalty. 4. What is an In -plan Roth conversion" and who is eligible to take advantage of the provision? This provision permits participants who are eligible to withdraw assets from the plan, as part of an eligible rollover distribution, to convert their pre -tax assets to Roth assets through an in -plan rollover (currently, participants must roll their assets from the plan to a Roth IRA to perform this type of conversion). Participants will be subject to income taxes on the amount they convert. However, distributions of Roth assets are tax -free if the requirements for a qualified distribution are met. 5. How will the addition of the new Roth provisions benefit plan participants? Adding the Roth provisions to your plan provides participants with additional options for their retirement savings. Other potential benefits include: • Higher after -tax contribution limits than Roth IRAs — 457 plans allow for greater after -tax savings. • Eligibility at all income levels — Unlike Roth IRAs, a participant's eligibility to make Roth contributions to the 457 plan is not restricted by income. • Tax-free distributions— Qualified distributions of Roth assets (i.e., contributions and associated earnings) are not subject to taxes. • Taxplanning— Having both pre -tax assets and Roth assets available in retirement can be a valuable benefit to participants, allowing them to choose the source of funds most advantageous to their situation at the time of distribution. BOTH CONTRHi MONS 6. How do participants elect to make Roth deferrals? Existing participants can use the deferral change form and new hires can use the enrollment form to indicate whether they want to make pre -tax deferrals, Roth deferrals, or a combination of both. If permitted by your plan, deferral changes can also be done online through ICMA -RC's Account Access website or through an Investor Services representative. T. How do participants know whether Roth or regular pre-tax contributions will be more advantageous? Participants will need to consider both their current income tax bracket and their expected income tax bracket in retirement. Roth deferrals may be most appropriate for participants expecting to be in a higher tax bracket in retirement, allowing them to pay taxes on the contributions now, at a lower tax rate, and receive tax -free distributions in retirement. A Roth Analyzer tool will be available on the ICMA -RC website at www.icmarc.org to help participants evaluate whether making Roth or pre- tax contributions will be most beneficial. Packet Page -1764- S. What is the contribution limit for Roth deferrals to a 457 plan? The same annual limitations that currently apply to your 457 plan will apply to the combination of all contributions to the plan, including Roth deferrals. 9. tmt participants make both pre -tax and Roth deferrals? Yes. Participants can make both types of deferrals, up to the annual contribution limit in effect for the year. 14. When can participants withdraw Roth assets from the 457 plan? Roth assets can be withdrawn whenever a distribution of non -Roth assets is permitted under your plan (e.g., retirement, termination, emergency situations). Pre -tax assets will be distributed prior to Roth assets, unless otherwise elected by the participant. 11. Why are pre -tax assets distributed prior to Roth assets, unless otherwise elected by the participant? 'This helps to ensure that participants are maximizing the tax benefits associated with their Roth contributions. ICAA -RC wants to make certain that Roth assets are not distributed prior to the time when the distribution will be qualified (tax- free), unless specifically requested by the participant. 12. Do required minimum distribution (RMD) rules apply to Roth assets in the 457 plan? Yes. 71te same RMD rules chat apply to other assets in your plan also apply to Roth assets. Distributions from the 457 plan must generally begin in the year the participant reaches age 701/2 or separates from service, whichever occurs later. •1 1 1 1 � 13. Can Roth assets he rolled over from the 457 plan to another plan? Generally, yes. However, the receiving plan must be able to accept and provide recordkeeping for Roth assets (e.g., a 457 plan with a Roth deferral provision, or a Roth IRA). 7/8/2014 16.E.6. 14. How do rollovers of Roth assets from other retirement plans impact the five -year period used in determining whether or not withdrawals from the plan are qualified? The five -year period is calculated using the year of the participant's first Roth deferral to the plan from which assets are being rolled out of or rolled to, whichever is earlier. For example, if a participant rolls over Roth assets from a previous employer's retirement plan where the participant began making Roth deferrals prior to making Roth deferrals in your plan, the earlier dare will be used to determine when the participant is eligible to receive qualified distributions of Roth assets from your plan. 15. How will a rollover to a Roth IRA impact the five -year period for calculating qualified distributions of Roth assets? Regardless of the date of the initial Roth deferral in the 457 plan, the date of the first Roth IRA contribution is used to determine whether distributions from the IRA are subject to taxes. 16. Can a Roth IRA be rolled over to a 457 pion that allows Roth contributions? No. A Roth IRA cannot be rolled over to a 457 plan, even if the plan allows for Roth contributions. 17. How do participants request an in -plan Roth conversion? Participants should contact ICMA -RC and request the In -Plan Roth Conversion Form. 15. Will an in -plan Roth conversion impact the five - taxable -year period used to determine if distributions of Roth assets will be qualified (i.e., tax free)? Yes. If the participant had not previously made Roth contributions to the plan, January I of the year in which the conversion takes place will be used as the date of his/ her first Roth contribution. 14. What are the federal income tax implications of converting pre -tax assets to Roth assets? Participants will be subject to income taxes on the taxable amount they convert to the Roth source, and the amount of taxes they owe will be calculated based on a participant's marginal income tax bracket. This can result in a significant tax liability (no taxes are withheld as part of the conversion). ICMA -RC recommends that participants consult with a qualified tax advisor before requesting an in -plan Roth conversion. Packet Page -1765- 20. Can participants convert pre -tax amounts to Roth amounts through a rollover to a Roth IRA, rather than an in -plan conversion? Yes. 457 plan assets are eligible for a direct rollover to a Roth IRA. 21. Are there any advantages to rolling the assets to a Roth IRA instead of doing an in -plan Roth conversion? Yes. If participants do a direct rollover to a Roth IRA, they can change their mind and reverse the conversion by moving the assets to a Traditional IRA through a process lmown as a recharacrerizadcn. This must be done by the participant prior to the deadline for filing his/her tax return for the year in which the conversion took place (generally, October 15 of the yeas following the calendar year in which the conversion took place). 22. How do Roth deferrals to a 457 plan differ from Roth IRA contributions? While Roth deferrals within a 457 plan and Roth IRA contributions provide similar benefits, they differ in certain important ways, such as: • Higher contribution limits: 457 plans allow for greater after -tax savings. • No income limits: All participants are eligible to make Roth contributions to a 457 plan, regardless of income. • Distribution ruies. While Roth IRA assets can generally be withdrawn at any time, participants can only withdraw Funds from your 457 plan when permitted by the plan (e.g., at separation, emergency). Additionally Roth IRA assets are not subject to required minimum distributions. 23. Con participants in our 457 plan who elect to make Roth deferrals still open and contribute to a Roth IRA? Yes. Ma -king Roth deferrals to a 457 plan does not limit a participant's eligibility to participate in a Roth IRA in any way. Participants can contribute the maximum amount to both a Roth IRA and a 457. 24. Can individuals have a Roth IRA and still make Roth deferrals to a 457 pion? Yes. Contributions to a Roth IRA do not reduce the amount of Roth deferrals that a participant can make to a 45' plan. 7/8/201416 III I 1,11Y11111V 25. Why is ICMA -RC offering the Roth provisions? The new Roth provisions provide 457 plan participants with additional tax - advantaged retirement savings opportunities. Making the provisions available is consistent with ICMA -RC's mission to assist public sector employees in building retirement security. 25. When did the Roth provisions become available in 457 plans? The Small Business Jobs Act of 2010, which was signed into law on September 27, 2010, made Roth provisions available in 457 plans beginning in 2011. ACCOUNTS 27. Are Roth assets in our 457 plan eligible for management under Managed Accounts, ICMA -RC's comprehensive ongoing professional account management service? Yes. Provided that your plan has adopted the Roth elective deferral provision and Managed Accounts, a participant's Roth assets are eligible to be included in Managed Accounts. ZDDING ROTH iPROVISIONSTOYOUR457TIAN 28. How do we add the Roth deferral and in -plan Roth conversion provisions to our 457 plan? Adding the Roth provisions to your 457 plan is easy, and ICMA -RC can help walk you through the process. We suggest that you review the information in the 457PIan Roth Provisions Plan Document Implementation Package and follow the instructions in the package. 203. Are there any additional fees associated with making Roth deferrals available? No. The addition of Roth deferrals to your 457 plan has no impact on the plan's fees. 30. When will participants be eligible to begin taking advantage of the new Roth provisions? ICMA -RC anticipates the new Roth provisions first being operational, in plans that elect to offer them, in the second quarter of 2011. You can elect to add the provisions to your plan at that rime or any time thereafter. 31. If I want additional information on the Roth provisions or about the adoption process, who should I contact? Please contact your ICMA -RC Client Services team at 800- 326 -7272. Packet Page -1766- 7/8/2014 16.E.6. icmnRC ICMA RETIREMENT CORPORATION 777 NORTH CAPITOL STREET, NE WASHINGTON, DC 20002-4240 800 -669 -7400 PARA ASISTENCIA EN ESPANOL LLAME AL 800 -669 -8216 WWW.ICMARC.ORG AC: 01114549 _. Packet Page -1767-