Empower reviews Norwalk deferred-comp and 401(a) plans, outlines SECURE Act changes and optional provisions

Empower, the retirement record‑keeper for Norwalk City, presented plan demographics, participant behavior and administrative items to the Norwalk City Pension Board, covering the city’s deferred compensation plan and the 401(a) money‑purchase plan and outlining optional and mandatory provisions in the SECURE Act that may affect administration.

In an executive summary, Bridal Walsh, relationship manager for Empower, told the board the deferred compensation plan held “a little over $55,000,000 in assets” as of the February report and that 451 participants had a balance, of which 392 were active participants. Walsh said about 64% of deferred‑comp participants use a target‑date strategy; 23.1% use a do‑it‑yourself allocation and 13.1% use Empower’s managed‑account solution. Average participant deferral was 7.5% and 27.2% of participants were contributing more than 10%.

Walsh said the plan recorded 95 distributions over a rolling 12‑month period (including separations from service, required minimum distributions, hardship and death claims) and that distributions totaled about $6,059,000 in the prior year compared with a more typical $3.2–$3.3 million in earlier years.

Why it matters: the presentation flagged items that would change plan administration and participant experience. Walsh told the board that one mandatory change under the SECURE Act would require certain high‑earners’ catch‑up contributions to be made as Roth contributions beginning in 2026; she cited the $145,000 prior‑year compensation threshold in the new provision. She also described optional provisions the board can adopt — for example, qualified birth/adoption distributions, specified federal‑disaster withdrawals, and an optional domestic‑abuse distribution (referenced in Empower materials as an allowable distribution up to $10,000 with a repayment window) — and noted the plan sponsor must expressly adopt those optional provisions for them to apply.

Empower highlighted participant behavior and communications: target‑date funds are the dominant default, and Walsh said 81.3% of target‑date users were within the plan’s glide path and 99% were within 20 percentage points of it. She said Roth contributions have increased (from 49 contributing Roth in March 2024 to 68 in the latest report) and that Empower conducts outreach, one‑on‑one counseling (Del Wells/Daryl Wells is the on‑site counselor cited by Empower) and targeted messages to encourage appropriate allocations.

On administration and security, Empower described its security guarantee, telling the board the firm investigates account breaches and will “make [participants] whole” if a participant suffers an unauthorized loss through no fault of their own. Empower also confirmed standard safeguards — two‑factor and verification procedures, payroll triggers for separating employees, and documentation checks for hardship, divorce (QDRO) and required distributions.

Follow up and board direction: Empower requested the board confirm whether it wants to adopt any of the optional SECURE Act provisions and offered to provide a written list of the voluntary items and related implementation materials. Walsh asked the board to confirm which office (HR, purchasing or the pension board) will make or approve adoption decisions; board members said they would consult HR and purchasing and return with the preferred decision process. Empower also noted the current contract structure (five‑year initial term with annual renewals) and expressed interest in discussing a new five‑year agreement; the board said it would consult the city’s purchasing/procurement office and consider a formal proposal.

Votes at a glance: the meeting approved routine minutes and adjourned. Motion and second were recorded for acceptance of minutes (March 12 and an earlier item dated 01/08/2022) and for adjournment; the board used voice approval (“Aye”) and no roll‑call tallies were recorded in the transcript.

Empower will provide the board written materials on the SECURE Act optional provisions, a payroll‑file checklist for the mandatory Roth catch‑up (effective January 1, 2026) and security documentation; the board asked staff to confirm decision authority and to circulate Empower’s materials to HR and purchasing for review.