Cookeville City council gave approval Thursday night to use the State of Tennessee Deferred Compensation Plan and move the existing financial plan to the state.
City Manager Mike Davidson sponsored the resolutions.
“Really what got this started was the state made the change allowing cities or local governments to participate in their deferred compensation plan. We started looking at their 457B plan. Throughout that process, we learned we can also participate in our 401Ks,” Davidson said. “We put together a committee. At the end of the process that committee unanimously recommended that we look to establish a new plan with TCRS and participate in the states 401k.”
Currently, the city covers approximately four hundred and thirty employees through the Tennessee Consolidated Retirement System and a 457B plan.
Davidson said moving the existing plans and establishing the state deferred compensation plan would give the employees more benefits. The benefits include access to a financial advisor and lower fees.
The state plans have similar aspects to the currently offered plans. Employees fund both the new and old plans, Davidson said.
“Especially the idea of having a financial advisor that they can speak to directly and look at the entire picture, everything in the portfolio that they have,” Davidson said, “Their TCRS benefit, any deferred compensation plan that they chose to participate in. One individual can see it all, as opposed to now, its all separated and they can’t see that information.”
Davidson said the state plan has less funding choices, but all of the plans have lower fees.
“The funds themselves are set aside with a trustee, so the state doesn’t manage that. They oversee the plan but there is a trustee that oversees and maintains those funds. Then you have a planned administrator who is the record keeper for all the employees and their contributions and the earnings on their investments.”
Davidson said Tennessee has one of the highest ranked retirement funds.