Hollywood City outlines three retirement options for employees; choice due March 11

Dave Keller, a member of the Hollywood City manager’s office, told employees the city is offering three retirement pathways: stay in the existing defined‑benefit (DB) pension, move to a defined‑contribution plan (DC/401(a)) or elect a hybrid that combines a smaller DB benefit with a DC account. “You are all currently in what is called a defined benefit pension plan,” Keller said, then summarized how the DB formula uses a multiplier, years of service and the average of an employee’s five highest annual salaries.

Keller said the city negotiated an option structure that responds to an IRS rule requiring employees to contribute the same percentage if they stay with the same employer. For most employees the contribution rate is 8 percent of salary; Keller said that under the DC/401(a) option the city will give an 8 percent salary offset so the switch is revenue‑neutral for the employee. “If you switch to the 401, your salary goes up. You still contribute 8%,” he said.

The hybrid plan, Keller explained, reduces the DB multiplier to 1 percent but splits contributions so employees contribute 3 percent into the DC piece and 5 percent overall into the combined plan; the city will provide a 3 percent salary offset for employees who choose the hybrid. In that scenario the city also contributes 2 percent to the DC piece, producing a 5 percent DC contribution when combined with the employee’s 3 percent.

Keller offered numerical examples to illustrate tradeoffs. Using a hypothetical employee whose five‑year average salary would be about $115,400, he presented a DB monthly pension example of roughly $7,200 over a 30‑year career and, by contrast, a projected 401(a) balance of roughly $686,000 assuming an 8 percent long‑term return. For the hybrid example he showed a combination of a $2,900 monthly DB check plus a DC balance of about $429,000 as an illustration, and warned the figures excluded longevity pay and are samples for comparison.

Nationwide representative Al described the DC investment options: employees will be placed by default into a target‑date fund tied to their expected retirement age, and can later move funds among nine eligible investment choices beginning April 11 on Nationwide’s site. Al explained the difference between passive (index) funds and active management and recommended employees consider professional advice if they are unsure. He cautioned that the election is irrevocable after the March 11 deadline: “On March 11, your decision is locked, it’s in stone,” he said.

Christine, the pension administrator handling forms and enrollment, directed employees to the city intranet for the ordinance text, plan documents and comparison charts and walked through the enrollment forms for each option. She said the DB plan stays unchanged for employees who check the DB box and return the signed, witnessed form by 5:00 p.m. on March 11; employees who do nothing will remain in the DB plan.

Staff answered detailed questions from employees about how existing DB contributions move to a new plan, the buyback option for the hybrid plan, DROP rules, tax treatment of the offsets and whether the 8 percent match is based on the original salary. Staff said refunded DB contributions transfer to the chosen plan with 4 percent simple interest; an employee confirmed the 8 percent offset is an exact dollar match based on the original salary (not compounded); and Christine explained the hybrid buyback mechanism that lets non‑vested employees use a portion of transferred funds to buy prior service credit in the DB portion.

Officials described DROP (deferred retirement option plan) mechanics and a recent change: employees who enter DROP can have pension payments credited into a DROP account for up to five years that earns whatever the pension fund returns but is floored at zero (participants do not lose principal if the fund posts a loss). Keller said the pension board and city amended an ordinance to allow employees to continue working after completing DROP, with city manager approval, and to withdraw DROP funds and roll them into a 457 or other retirement vehicle while continuing employment.

Key deadlines and next steps: employees must return completed, witnessed forms by March 11 (forms are in the handout and on the intranet). If an employee elects a new plan, payroll and the city offset take effect with the pay period beginning March 30; employees placed into DC or hybrid default target‑date funds can change investment elections on Nationwide’s site starting April 11. Staff offered one‑on‑one appointments (a QR code on distributed materials) and contact numbers for follow‑up questions.

What remains unresolved: staff said HR will review how offsets interact with pay‑range ceilings for employees already at the top of a range and will provide follow‑up guidance; several operational payroll and compensation details were flagged for later clarification.

The presentation closed with the city’s contact information and an offer of follow‑up assistance for employees who want individual counseling. The session included multiple question‑and‑answer exchanges where staff repeatedly emphasized the deadline and the importance of consulting tax or independent financial advisors for personal tax consequences.