Personnel AdministrationDeferred Compensation

Section § 19993

Explanation

This law allows the department to set up a special retirement savings plan for officers and employees, which gives tax benefits, under specific federal rules. Participants can agree to have part of their wages deducted to contribute to this plan.

If this law conflicts with any agreements made through official negotiations, those agreements take priority. However, if the agreements require spending money, they need the Legislature's approval as part of the annual budget.

(a)CA Government Code § 19993(a) The department may establish for officers and employees a tax-advantaged retirement savings plan in accordance with Section 457(b) of the Internal Revenue Code. Participation in the plan shall be by agreement between the officers and employees and the state which shall provide for deduction of a portion of those officers’ or employees’ wages. Officers and employees may authorize deductions to be made from their wages for the purpose of participating in the tax-advantaged retirement savings plan.
(b)CA Government Code § 19993(b) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
retirement savings plan 457(b) plan wage deduction ...

Section § 19993.05

Explanation

This law is called the Freedom of Financial Choice Act. It requires the department managing state employee tax-advantaged retirement savings plans to offer a wide range of investment options.

The department decides which investment products to include in the core portfolio and must choose them wisely for the benefit of the participants. They must also ensure these options are reasonably priced and comply with the Internal Revenue Code and state law. A brokerage option must also be offered.

Fiduciaries, or those managing the plans, are not responsible for losses from individual investment choices made by participants, unless the fiduciary is involved in wrongdoing.

The Deferred Compensation Plan Fund is not subject to certain state administrative requirements.

(a)CA Government Code § 19993.05(a) This section shall be known and may be cited as the Freedom of Financial Choice Act.
(b)CA Government Code § 19993.05(b) The department shall provide officers and employees participating in a tax-advantaged retirement savings plan established by the department under this chapter or Chapter 9 (commencing with Section 19999.5) with a broad range of investment options. The department shall have the exclusive authority to determine the investment products provided in the core portfolio under tax-advantaged retirement savings plans and shall make these selections in a prudent manner for the exclusive benefit of plan participants, retirees, and their beneficiaries. The department shall ensure that the cost of these investment options are reasonable under the prevailing facts and circumstances and that any investment alternatives determined appropriate for the core portfolio. The investment options available under the tax-advantaged retirement savings plans shall also be limited to the extent necessary to ensure the continued qualification of the plans under the Internal Revenue Code, applicable to state law, and the cost-efficient and timely administration of the plans. In addition to the core options, the department shall offer a brokerage option.
(c)CA Government Code § 19993.05(c) No fiduciary of a plan established by the department under this chapter or Chapter 9 (commencing with Section 19999.5) shall be liable for any loss that results from any individual investment choice made by a participant of a plan, except that this subdivision shall not extend to any malfeasance or misfeasance by any fiduciary of a plan established by the department under this chapter or Chapter 9 (commencing with Section 19999.5).
(d)CA Government Code § 19993.05(d) Notwithstanding any other law, the Deferred Compensation Plan Fund (0915) is exempt from the application of Article 2 (commencing with Section 11270) of Chapter 3 of Part 3 of Division 3.
Freedom of Financial Choice Act tax-advantaged retirement savings investment options ...