ACCE Benefit Trust Spring Meeting
Santa Rosa, CA
Nov 2-3, 2016
Minutes
Present: Mike Neal, Bill Miles, Bob Quick, Gary Toebben, Tara Barney, Betty Capestany, Michael Dalby, Tracey Osborne, Bill Connors
Staff: David Huntley, Stacey Breslin, and Jacqui Cook
Guests: Randy Gordon, Chairman of FBI;Marsha Mathis, Principal
Prior to the start of the meeting, Mick Fleming was Skyped in to talk about his recent retirement announcement and the plan for his succession.
Minutes
Chairman Mike Neal called the meeting to order and asked for a review of the August 2016 meeting minutes. Bill Miles made a motion to accept the minutes and Bob Quick seconded. Motion passed.
Financials
Jacqui Cookprovided a review of the September 2016financials. Three quarters through the year, Jacqui focused on the expenses that were in excess of projected and explained the reasoning. Stacey reminded the trustees that some of the expenses appeared to be lower than projected, but this is only due to the cyclical nature of things. There were no questions regarding the balance sheet or statement of revenue/expense. Gary Toebbenmade a motion to accept the September 2016financials and Tara Barney seconded. Motion passed.
Jacqui then moved on to the 2015 Benefit Trust audit and conferenced in Cohn & Resnick to take the trustees through the audited financials.With no questions from the group, Bill Miles made a motion to accept theaudited 2015financials and Bill Connors seconded it. Motion passed.
Stacey reminded the group that the MEP Audit was completed in July and a copy of the audited financials was posted and available for the group on the website.Mike Neal requested that we go over as a group so Stacey contacted BKD and they agreed to dial in. BKD later dialed in and took the group through the audited MEP financials. No motion required as this was previously approved by the audit committee for filing in July.
Jacqui then introduced the proposed 2017 Benefit Trust budget. The trustees suggested an amendment to the budget to add $1500 back into the “Other Expenses” in case there was unanticipated turnover or an iPad replacement became necessary. Gary Toebben made a motion to approve the amended 2017 budget. Betty Capestany seconded it. Motion passed.
HR Investment Report
Mike handed the floor over to Dave Huntley for a review of the current 401k and 457b plan investments.
Dave was pleased to report that the year to date performance on the 401k investment options was positive on both an absolute and relative basis. He went into a detailed review of the individual investments and at the end no watch list action was taken by the trustees.
Dave then informed the trustees of an issue in the self-directed brokerage option within the 401k plan. It was discovered that about 15 participants had purchased master limited partnerships (MLP)beginning in 2009 which are a restricted investment since the brokerage accounts are part of a 401k plan. Dave walked the trustees through the work that Principal and Groom had performed and explained the next step would be to calculate the exact tax liability and perform the tax filing. Stacey mentioned that she would reach out to BKD for this work following the trustees’ approval to move forward. Gary Toebben made the motion for Stacey to proceed. Tracey Osborne seconded. Motion passed. Stacey shared that once filing through 2016 was completed, the only remaining action would be to complete the liquidation of any remaining MLPs and perform the final tax filing in 2017. She promised the trustees an update on this during the February meeting. A group discussion then ensued regarding the Department of Labor’s (DOL) attention to brokerage options within 401k plans. There was a consensus thatwith the anticipated DOL action on these options, in combination with the problems the accounts were now creating, the brokerage accounts should be frozen to new contributions as a first-step in potentially shutting them down within the next few years. Gary Toebben made the motion to freeze brokerage to new contributions and Michael Dalby seconded. Motion passed.
The only remaining action item on the 401k plan that Dave recommended was the annual update/acceptance of the Investment Policy Statement. Gary Toebben made a motion to approved and Mike Neal seconded it. Motion approved.
Dave shared the HR Investment Consultants contract renewal. Dave was asked to leave the room while the trustees discussed. Following a brief discussion, Bill Miles made a motion to approve the renewal of the contract and Bob Quick seconded. Motion passed and Dave was invited back into the meeting.
Dave began again with the annual review of Participant Advice Services for review and discussion. No action was needed.
Dave then went over the 457b investment review. He mentioned that this will be the last review on the old line-up since the funds were changed in October to mirror the 401k changes earlier in 2016. Again, he was pleased to report that the year to date performance on the 457b investment options was positive on both an absolute and relative basis. He went into a detailed review of the individual investments and at the end no watch list action was taken by the trustees.
Principal Report
Marsha Mathis from Principal was invited to join the meeting.
Marsha went through the 401k and 457b plan reports with the trustees. This included plan trends, communications efforts and results, and compliance and regulatory updates necessary for the trustees to continue satisfying their fiduciary responsibilities for the plan. She also reminded the trustees that the changes in the 457b line-up were completed in October which included the new money market fund.
Marsha proposed one action item on the 401k plan which was a re-enrollment to take care of participants that had been eligible for the plan before the new minimum auto-enrollment went into effect on January 1, 2016. There was a lengthy discussion regarding the pros and cons of this idea as well as the best timing and appropriate frequency for such an action. At the end, the trustees felt it would be prudent to take the action of performing an auto-enrollment for those who had been eligible prior to this year. It was also believed that the timing was good since the 2016 auto-enrollment experience had been received positively. Annual frequency was not preferred. Instead the trustees wanted to keep the frequency open so they would be able to monitor and determine future re-enrollments as deemed appropriate. Gary Toebben made a motion to move forward with a re-enrollment on January 1, 2017 or as soon as administratively feasible. Bob Quick seconded. Motion passed.
Note: In December 2017, Stacey informed the trustees that March 1, 2017 would be the best date for the re-enrollment to allow proper employer and participant notification and to allow participants a 30-day opt out window. Also recommended was that the re-enrollment should only affect those participants with a zero deferral rate so that those with Roth deferrals or dollar elections that had been proactively made would not be affected. The trustees agreed and instructed Stacey to continue moving forward.
Growth and Retention
Stacey reviewed the 2016 report with the group which was very positive on all areas. New sales were at an all-time high and more than double the annual goal, all plan losses were due to terminations (not one transfer to another 401k plan), and at risk plan retention rates were extremely high. Stacey was also very pleased to have had four plans that were converted with assets, but noted only one would be considered a large plan. Stacey stressed that her attention for 2017 would be the larger conversion plans which would likely reduce the number of new plans in 2017, but that the transferring assets would more than make up for it. That said, Stacey will still spend some time in 2017 looking for start-up plan opportunities and will also continue to focus on those she believes to be at risk.
Meeting adjourned.