County adds managed investment and lifetime-income options to 457(b) deferred-comp plan

Blackhawk County supervisors on Aug. 26 approved several updates to the county's 457(b) deferred-compensation plan that give employees more investment choices and shift fiduciary services to an outside manager.

The board voted to replace Morningstar Associates LLC with Creative Planning as the plan fiduciary services provider, add a managed Nationwide Pro account as an optional investment, add Income America's 'Income for Life' target-date option, enable a dynamic default feature for participants who do not select funds, and authorize staff signatories to execute plan documents.

Why it matters: county officials said the changes are intended to offer lower fees, more personalized investment management for participants and an option that can provide a lifetime-income stream similar to a pension. Anna Bessemer, director, said Creative Planning was recommended because it showed "better average monthly historical returns for investments and reduced fees for participants." She added the county would otherwise assume fiduciary responsibility for choosing and managing funds.

County staff and the Nationwide representative said the managed pro account carries a program fee that starts at 0.65% annually on the first $100,000 of assets (about $65 per year on $10,000), with lower breakpoints at higher balances. Bessemer said 77 employees were currently active in deferred compensation and that the managed option is voluntary: participants can enroll or withdraw at any time.

The Income America option was described as a target-date, guaranteed-income style fund that, according to the plan summary presented, uses a hypothetical example in which a participant could receive 5% annually of an established income base. Bessemer said the option is "sort of" a hybrid product that can provide more guaranteed lifetime income to participants.

The board also approved a dynamic-default feature intended to move unallocated deferrals into an age-appropriate target-date path if an employee never selects investments. Bessemer said the feature is rarely needed but useful "if somebody would start to defer but not even make an election."

Formal action: the board passed the resolutions by roll call. The county authorized the chair and designated staff to sign adoption and administrative documents and asked staff to distribute plan information and schedule on-site consultations with the Nationwide representative.

The changes take effect following administrative steps by plan administrators; staff said Nationwide will continue to provide participant education and in-person consultations several times a year. The board did not set any employer cost for these options; fees presented apply to participants.

Any questions for staff were answered during the meeting, and staff committed to follow up on any additional fee details requested by supervisors.