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File #: 15-16510    Version: 1 Name:
Type: Business Item Status: Agenda Ready
File created: 9/22/2021 In control: City Council Business Meeting
On agenda: 10/11/2021 Final action: 10/11/2021
Title: Correction to 401(k) Contributions
Attachments: 1. Budget Ordinance

Title

Correction to 401(k) Contributions

 

Action

Action:

A.                     Approve payment to Prudential Retirement to correct employer contributions for vacation payout to certain individual 401(k) account participants, and

 

B.                     Adopt a budget ordinance appropriating $1,018,357 from the Risk Management Loss Fund’s Fund Balance to the Risk Management Loss Fund.

 

Body

Staff Resource(s):

Brent Cagle, City Manager’s Office

 

Explanation:

§                     401(k) benefits contributions on annual leave payouts were initially not included between January 2001 to May 2020 due to a software system configuration error. 

§                     In 2020, the City discovered and corrected the error so that all future vacation payouts comply with the 401(k) employer contribution requirement. 

§                     The 401(k) plan is governed by the NC State Treasurer and administered by Prudential Retirement (Prudential). After consultation with City staff, State Treasurer’s Office, and Prudential, the requirement to provide retroactive principal and interest was clarified. 

§                     Since 2001, 5,909 vacation payouts were affected with an average value of $146; the employer contribution total is $862,843.28.

§                     Prudential, as the 401(k) plan recordkeeper, is responsible for calculating the interest due on missed payouts.

§                     The anticipated amount of calculated interest on the above payout is $1,018,357.  The exact amount will be calculated by Prudential upon payment. 

§                     Prudential will notify each account participant that a correction occurred and deposit funds into participants’ accounts. For closed accounts or deceased participants, Prudential will follow its standard processes to send funds to participants or their beneficiaries. 

 

Fiscal Note:

Risk Management Loss Fund

 

Attachments

Attachment(s)

Budget Ordinance