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Staff outlines GMA retirement option with employee match, tentative May 1 start
Summary
City staff presented a proposal to enroll employees in a combined 401(a)/457(b) plan administered by GMA that would include employee Roth contributions, employer matching up to 5% of pay, and initial annual employer cost estimated at roughly $16,519.55.
City staff detailed a proposed employee retirement package at the Walnut Grove City Council work session on March 26. The plan, described as a combination 401(a) and 457(b) administered by GMA, would allow employee Roth contributions with employer matching contributions and a tentative effective date of May 1.
The staff presentation said eligible employees would include all city employees and elected or appointed members of the governing authority. Under the proposed structure, the city would match 100% of employee contributions up to 3% of includable compensation, then contribute 50% of additional contributions up to a total cap of 5% of includable compensation. Staff gave a first-year employer cost estimate of $16,519.55.
Staff also explained the plan’s vesting and administrative terms: employee contributions would be Roth (taxed as paid) and fully invested after two years of employment; matching contributions would remain unvested until the employee satisfied the two‑year investment period. Administrative fees were described as $15 per quarter plus a 6% annual account-balance fee charged to the employee’s account, not to the city.
Council members asked follow-up questions about pretax versus Roth treatment, participation thresholds, and what happens to employer matching if an employee leaves before vesting. Staff confirmed contributions are Roth and that employer matching remains the city’s expense; staff said they would verify a few fee details before bringing formal documents forward. No formal vote on the plan was taken at the work session.
The council asked staff to return with clarified fee language and a draft ordinance or resolution to consider at a later meeting.
