GO Item 1
April 12, 2012
Government Operations and Fiscal Policy Committee
Robert H. Drummer, Senior Legislative Attorney
Worksession: Expedited Bill 7-12, Employees' Retirement System - Automatic
Expected attendee: Linda Herman, Executive Director for the Board of Investment Trustees
Expedited Bill 7-12, Employees' Retirement System - Automatic Distributions,
sponsored by the Council President at the request of the County Executive, was introduced on
March 6, 2012. A public hearing was held on March 27.
Bill 7-12 would provide for an automatic distribution for account balances of $1,000 or
less in the Optional and Integrated Plans and the Elected Officials' Plan of the Employees'
Retirement System. There is a significant cost associated with maintaining small account
balances for terminated participants of the Optional, Integrated, and Elected Officials Plan of the
Employees' Retirement System. This Bill would reduce Plan administrative costs if these
participant accounts are automatically distributed. Bill 54-10, enacted on November 30, 2010,
added a similar provision for a terminated participant's account balance of $1000 or less in the
Retirement Savings Plan and the Deferred Compensation Plan.
The only witness at the March 27 public hearing, Linda Herman, Executive Director for
the Board ofInvestrnent Trustees, supported the Bill on behalf ofthe Executive (©12).
Currently, a participant in the Optional, Integrated, or Elected Officials' Plan in the
Employees' Retirement System who leaves County service must request a distribution regardless
of the size of the account. The Internal Revenue Code permits a plan sponsor to distribute
account balances of less than $1000 automatically without a request. The cost to administer
these small accounts is charged to the Trust Fund. This Bill would authorize the automatic
distribution of these small accounts without waiting for the terminated employee to request it.
This would be consistent with the automatic distributions of small accounts to terminated
employees in the Retirement Savings Plan and the Deferred Compensation Plan. Council staff
recommendation: approve the Bill as introduced.