To: Board of Supervisors
From: Ann Elliott, Human Resources Director
Report Title: Contract with Charles Schwab & Co. Inc. for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan Participants for Self-Directed Brokerage Account Services
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Administrator, or designee, to execute the Schwab Personal Choice Retirement Account Plan Application and Agreement with Charles Schwab & Co. Inc. for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan and for Self-Directed Brokerage Account services, for the period January 1, 2025, through December 31, 2027, subject to approval as to form by County Counsel.
FISCAL IMPACT:
The contract is funded by fees charged to participants’ 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan accounts. There is no other fiscal impact to the County beyond overhead administrative support costs, which are partially offset through the Contra Costa County Deferred Compensation Plan (I.R.C. § 457) (“the Plan”).
Participants that elect to enroll in the Self-Directed Brokerage Account are subject to fees imposed by Charles Schwab for annual enrollment in addition to fees based on investments selected. Each investment option has an investment management fee that varies by investment option.
BACKGROUND:
A Request for Proposals (RFP) for Recordkeeper Services for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan was issued in April 2024. Empower Annuity Insurance Company of America was selected for administrative services for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan. Charles Schwab & Co. is the financial institution that Empower partners with for the Self-Directed Brokerage Account (SDBA).
Under the Schwab Personal Choice Retirement Account Plan Agreement, Participants will continue to have the option of contributing funds to a SDBA through Schwab. For those Participants with funds currently in a Schwab SDBA, the funds will continue to be held by Schwab. SDBAs allow Participants to exercise a higher level of control over their 457(b) Plan and 401(a) Plan funds. Schwab will provide SDBA services pursuant to the terms in the Personal Choice Retirement Account Plan Application and Agreement, which contains mutual indemnification and arbitration clauses. Empower will provide recordkeeping and administrative services for the SDBAs offered through Schwab, subject to applicable fees, as described in the contract with Empower.
The contract includes two optional one-year extensions. The Human Resources Director will return to the Board for approval to exercise the optional extensions.
CONSEQUENCE OF NEGATIVE ACTION:
Without a contract in place, participants of the 457(b) Deferred Compensation and 401(a) Defined Contribution Plans will not have access to a SDBA through Charles Schwab.