Finance Committee - Regular Meeting

Order. It is now 02:00. Can you oh, I'm sorry.

Make sure that's on. See?

I'm loud enough. I thought it is 02:00, 02:01, and we are calling the deferred compensation board meeting to order. The first business item is item ID twenty five zero two six seven nine to review and possible action on adding a Roth investment option with the city's mass mutual deferred compensation plan. I forgot the language. Come on. Help me out. Everybody looking at me. What? Don't I need somebody to oh. Kaylee, would you like to tell us what we're here for?

Thank you. Yes. So we have Scott Goodwin and Dan Detloff here. They are representatives for our deferred comp vendor, MassMutual, and they are gonna speak on adding the Roth option.

You.

My name is Scott Goodwin.

And Dan Della. Thank you.

Thank you

for having us.

Thanks for allowing us to come here and present to the board about why we're asking the Roth contribution to be added to the retirement plan. It's because we don't have one right now. And what happened I'll step back and explain where we're at the situation here. MetLife and Brighthouse have been here since 1985. So we've been here forty years working as the advisers and with the plan here.

And if you look on the contribution remittance form, the one that you had put in front of you, explains a little bit about the companies. These are the companies that we all represent. MetLife had these companies and we narrowed them down over the last since 1998 when we went to consolidated billing, we took care of these companies. Now most of these companies have changed names or gone out of business. So we don't use them.

We use the Brighthouse and the MetLife plan. Now, hence, Dan and I work for Mass Mutual. How does that relate to MetLife and Brighthouse? MetLife bought Brighthouse back in 2020 twenty o one. So we changed the name. For some reason, it used to be called Travelers because Travelers used to own it. MetLife bought them. So then MetLife changed Travelers names to Brighthouse. So that's what we were using for the employees here with the name. Now Brighthouse does not want to add the Roth contributions because they feel it will not be accurate until all states comply.

So right now, 22 states in United States comply with adding a Roth, but they don't. So they won't do it until the last state applies. Well, we can't wait for your employees for this option. So we're just gonna use the MetLife Roth option in the investment plan. Okay? So again, we're still using the same company, but MetLife is going to be the provider now for that investment. MetLife is the owner of Brighthouse. We still use the same third party administrator, Great Gadsby. So nothing changes for the employees. Nothing changes for the responsibility of you, Kaylee, to sign off on any forms.

So all we're using is the MetLife is gonna be having the Roth option in the deferred comp in and of itself.

Yes. See, MetLife's been around for it's one of the oldest and largest companies of its kind in the world. And over time, they just decided they didn't wanna spend $26,000,000 a year paying the Charles Schultz Foundation for the Snoopy and the Blimp. And they came up with Brighthouse, and yet not everything went to Brighthouse. They still MetLife still MetLife. It's just that it got funneled with the city of Waukesha. It got the product got funneled into the Brighthouse product, and MetLife has the Roth option. MetLife is always been kind of part of the plan, but we just don't use it. And we kind of haven't been able to without someone saying, yeah, go ahead and use it.

Okay. So hence where MassMutual comes from. MassMutual in twenty in twenty sixteen bought MetLife distribution channel and their retirement plans. So that's why we are called we work for MassMutual, but we represent the MetLife plans. That's the agreement that MetLife and MassMutual had together. So now MassMutual's the owner, but we distribute them the the MetLife plan in and of itself for the city here.

Any questions? So if there are no questions, do we does somebody wanna make a motion?

Are you You have more presentation to come. Well, a

little bit. So I we meet with dozens of employees throughout the year, and it always comes up. Like, I would like to and the form itself even allows you to say how much you wanna put in the Roth part, but because we haven't had the product in the mix to be able to do it, we either have to open a separate account, a separate investment account for them that they invest on the side versus doing it as a payroll deduction because they want to also contribute to a Roth. So with Scott's tenacity and working with Kaylee trying to get right here today, we're here, thankfully, to be able to work with the employees of the city to be able to offer that as a payroll deduction. And in doing so, with the MetLife product, they will have the ability to not only contribute to a Roth through payroll deduction, but do so with significantly more money than they if they wanted to, than they would be able to do if they were to do it on their own because there's limitations.

You have as what you can do 7,000 if you're under 50, up to 8,000. But if an employee wants to do more, they could do up to 32,000 in a Roth through payroll deduction. And, again, it there's no change whatsoever for human resources for from an an administrative standpoint. There's no cost to the city to add the Roth. It's simply allowing the employees the ability to invest both pretax and after tax in the Roth.

So if you're familiar with what a Roth is, it's simply being able to invest your money on an after tax basis, let the money grow tax free, and be able to take the money out tax free. So many most city employees have a pension. It's gonna be taxable. They're putting money into their deferred comp. It's taxable. So being able to have that additional bucket from a tax standpoint to be able to put money in after tax and not be in their retirement and and have to pay taxes on that money as they live on it is a nice option. And so it comes up often. Employees wanna do it. We can't help them. So we're here to say, hey, let us let us help them that way.

And because MetLife is already already part of the program, so to speak, it's just a matter of giving the okay to fill out different paperwork. That's pretty much it.

So the third party administrator is Great Gatsby. They're the ones that we can send five different companies to. They're the ones that approve or disapprove whatever. So third the the TPA has been here for forty years. We're just simply going to be using the MetLife, that's all, that has this option available for the employees. Okay? And it's one form that nothing changes. You sign that form or is yeah. Kaylee signs the form, nothing changes. We still use the third party administrator. Everything stays the same. No no additional cost.

And there's two things. The the MetLife product also, there's a greater variety of investment options for the employees. The other big thing is that the internal costs to them are less than half.

Yeah. They went down by almost almost one full percent and we get to use Morningstar's for your perform for your fund selections. We can actually use Morningstar who has their fiduciary responsibility instead of ours when we rebalance portfolios or build portfolios for the employees.

And currently, the Bright House product has surrender fees on it. There's not any administrative cost built into the Bright Bright House product, but there is surrender fees. And so we would be taking that off the plate too. So for the employees, it's a little more portability. And should they wanna move their account if they were to leave or otherwise, they wouldn't have costs in that respect. So not only is the Roth option great for them and they can invest on an after tax basis, have a grow tax free, get it out tax free, but internally, the internal cost is cut in half, like cut down to like two thirds almost. K.

Have there been conversations with my team about how you will educate employees on these changes?

That was a great one. We were gonna talk to Kaylee about that after the first of the year. I don't know that we're kinda at your will. What I mean, besides the we had the meeting here, what, in November, the new employees orientation, which to me was a great success because Dan and I talked to probably a 100 people and got at least 60 names that we need to call and and set appointments with. So other net, how do we meet quarterly? I are I kinda like work with the firefighters. Dan kinda works more with Police. Police, and I work with sanitation. So we go to those departments already, and we just are available to talk if anybody will wants to.

I'm calling on them though. I'll either meet at the police station in their little conference room in the front or they'll come to my office. Sometimes they'll go to their home.

You know? I guess I'm looking for help from you.

We can iron off the details. I'm just wondering if there were thoughts or conversations about doing that.

So We do a lot of that with Milwaukee Public Schools. We have their investment plan too. So and being that they're so large, we do a lot of Zoom stuff. We do additional stuff at at the districts and stuff. We try to coordinate between 10 schools, you know, and rotate them through with quarterly presentations or semi annual.

Anything else? I think that covers it.

I think that's it.

Pretty sure. But I think the biggest deal is that it's it's there's there's no cost or no change to the city. It really to add the option. It doesn't it doesn't increase any liability from that standpoint or financially or anything.

So We wouldn't be here if if Brighthouse allow us add the option and they're not. So we're not waiting for that to change anymore because we were already a year late to the table on this.

Can I make a motion? Please. Okay. I move that we approve the addition of the MetLife Roth IRA to our deferred compensation offerings to our employees and authorize Kaylee to execute the paperwork to do it.

Second.

Well, I'd like to make an amendment. So can I make an amendment as the chair?

Sure.

All of what he said and any HR staff member to sign off on it. So that's the amendment. So I don't know if you wanna reword it or how you wanna do that.

To sign off on what paperwork needs to be done? It's

it's usually this. It's just the it's the and then the application needs approval. Now Kaylee is the one that usually signs off. So if somebody else needs to be authorized, then I would need a letter from you just stating those individuals who can sign off. If Kaylee's not in, we we don't send these often. Maybe once a week, two ways a week. Yeah. We send them to her. But if if you want to add somebody, we need to know this so we can put this with the third party administrator so they know that person is authorized. Okay?

Okay. Yeah. We should specify

Right. Yeah. Or more because anything could happen.

By name.

Right. No. For sure. Okay. That could change.

You could

I should automatically be on there. I should be. But How

about just by position?

You said what about by position?

How many times is this going to happen? Is this going to be an ongoing process of signing these papers over time?

Every every new enrollment, we have to have the approval from the administrator or whoever it is, and she just signs off. That's all it is. Got it.

It's just a signature on every application gets signed so that we can process it.

Got it. Right.

Correct. But there's no initial paperwork to adopt this.

Like for for the entity wide like Correct.

Yeah. That's what I was thinking

of when I was

suggesting that Kaylee be authorized. But if it's somebody to do it each time an application goes in, then yeah. Let's say that well, you tell me who in your department should be authorized to do it.

Jim, that part. So it's By position.

Yes. By position.

I think right now three of us are now.

You three are on there right now.

Correct. So I Okay. And the only reason I specified is because you specifically said

But, Brian, I think the question is, does this have to go to are we are we making a motion to counsel for this approval or are we just approving this as our

We're just approving it. Okay.

So maybe we don't need to specify

Yeah. If your names are already as authorized signers, then we don't need to do any further authorization for someone to Okay.

Yeah. I thought I thought the conversation was more around the TPA and whether or not that needed to be modified. But it sounds like we're talking about really a procedural matter Right. More than anything.

Literally just the department of

We went to that first to get that approved before we came here. Okay. And everything's fine with that. Okay.

Okay. Well then I'll restate my motion. Thank you. I move that we approve the MetLife Roth IRA to be added as one of our deferred compensation offerings to our employees. Okay.

Thank you. And I will second that.

It has been moved and seconded that we will approve this for our employees. Any further discussion? Yeah. Because All those who say aye. All those in favor. Say aye. Say aye.

Aye. Aye.

Aye. All those any opposed? It has been moved and passed.

Passed unanimously.

Oh my gosh.

This is hilarious. Any other

business?

No. I would make a motion that we adjourn.

Agreed.

Any disagreement? No

objection. There

you go.

You. Adjourned. Thank you.