Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8e
ACTION ITEM
Date of Meeting
April 28, 2026
DATE : April 6, 2026
TO: Stephen P. Metruck, Executive Director
FROM: Kecia Reichstein, Director, HR Total Rewards
Katie Gerard, Sr. Director, Human Resources
SUBJECT: Contract to Provide Record Keeping, Investing, Reporting and Educational Services
to the Port’s 457 and 401(a) Deferred Compensation Plan participants
Amount of this request:
$3,477,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to execute a contract to provide
record keeping, investing, reporting and education services for the Port’s 457 and 401(a) deferred
compensation plans. The contract will be a five-year contract with the option to extend, up to a
5-year additional extension. The value of the contract is estimated at $3.47 million.
EXECUTIVE SUMMARY
The Port of Seattle offers deferred compensation plans as an important element of the Total
Rewards package. These plans contribute to the Port’s ability to attract and retain employees
with the skills and abilities essential to achieving the Port’s mission and goals. The Port’s deferred
compensation plans include a 457 deferred compensation plan that all regular employees may
participate in to set aside pre-tax and Roth funds for retirement. In addition the Port has three
401(a) plans, on that holds the limited matching contributions the Port makes to the non-
represented employees’ 457 plan contributions, one for sworn Police personnel that holds the
Port’s contributions that are made in lieu of contributions to Social Security, and one for
Firefighters that also holds the Port’s contributions that are in lieu of contributions to Social
Security. The plans are in addition to the State and union trust pension plans that Port employees
participate in.
We are requesting authorization for the Executive Director to execute a five-year contract with
the option to extend for up to five additional years based on negotiated rates for the second five
years and a maximum contract value of $3.47 million. Plan participants will pay an estimated
62.5% of these fees, or $2.8 million over the course of the 10-year contract. It is estimated the
Port will pay $1.3 million over the course of the 10-year contract.
COMMISSION AGENDA – Action Item No. 8e Page 2 of 6
Meeting Date: April 28, 2026
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
The Port contracts with a vendor to provide record keeping services as well as reporting,
investing, and education services associated with these plans. The current contract, which
expires in March 2027 is a flat rate contract. The current contracted fees is $60 per participant
per year. Most fees are paid by plan participants (employees and retirees with account balances),
but the Port is responsible for fees associated with the non-represented employees matching
401(a) plan accounts and other costs associated with implementation and administration of the
plan.
DETAILS
The Port of Seattle has offered a 457 Deferred Compensation plan since 1975. This plan is
available to nearly all Port employees. The 457 plan is a supplemental retirement savings plan
and is in addition to the pension plans administered by the State Department of Retirement
Systems or union trusts that employees participate in. The 457 plan provides a retirement savings
opportunity for employees to supplement their Port pension and any other retirement or pension
benefits they may receive when they retire.
In 2000, the Port implemented a 401(a) Supplemental Savings Plan for non-represented
employees that provides limited Port matching contributions ($1000 to $2200 based on Port
service) to employees’ 457 plan contributions. This plan supports employees saving for their
retirement with the matching contributions and recognizes employee service by increasing the
Port’s contribution as employee’s length of service increases.
In 2002, 401(a) plans were negotiated to receive Port contributions in lieu of Social Security for
Uniformed Services employees, Police Officers and Firefighters, who do not participate in Social
Security. The 401(a) plans are incorporated into these employees’ collective bargaining
agreements.
These 401(a) plans are also supplemental retirement savings vehicles and are in addition to the
Department of Retirement Systems (DRS) and union trust pension plans that most employees
participate in.
The contract with the current vendor will expire in early March, 2027. If a new vendor is selected
through the competitive procurement process there will be significant work required to transfer
data and funds to the new vendor and the timing of the transfer will need to be communicated
well in advance to plan participants as there will be a period of time when investment changes
cannot be made. Interfaces that permit electronic transmittal of data and funds from the Port to
the vendor will need to be updated to reflect a new vendor’s record keeping system. To provide
sufficient time to transition to a new vendor, if one is selected, we initiate Request for Proposal
activities by the end of May 2026.
The transition to a new deferred compensation plan vendor, or any benefit plan administrator,
COMMISSION AGENDA – Action Item No. 8e Page 3 of 6
Meeting Date: April 28, 2026
Template revised June 27, 2019 (Diversity in Contracting).
requires Port systems and process to be updated to reflect the new vendor’s way of doing
business. The change will impact Port employees who interact with the vendor to administer the
plan, as well as all employees, and former employees, who have deferred compensation account
balances. These changes require time not only for the transition of data and funds, but also for
staff administering the plan to understand all the different ways of working with a new vendor
but also for plan participants to set up new online accounts and understand how to access
information about their accounts and who to contact when they need assistance. Because these
transitions typically take two and a half to three years to be fully worked through we are
requesting authorization for a five-year contract with the option to extend, following fee
negotiations, for up to five additional years.
Scope of Work
The vendor contract currently in place provides a variety of services related to these plans.
1. Record keeping is a significant portion of the service the vendor provides. The vendor
tracks employee and Port contributions, employees’ investment earnings, and
disbursements from the plan when employees retire and begin withdrawing their savings.
Employees select how to invest their plan contributions from a variety of available
investment options. The vendor maintains a record of plan participants’ investment
options and also executes changes to employees’ investment choices by moving funds at
employees’ request.
2. The vendor provides is reporting on plan participants’ account balances. Plan participants
can access their account online at any time to view balances and investments and to
conduct investment transactions. Account statements are produced on a quarterly basis
showing contributions, investments, investment earnings, plan fees, account
distributions, and changes in how funds are invested. The quarterly reports also show
participants the rate of return on their account.
3. The vendor provides online and ad hoc reports to the Administrative Committee that
oversees the plan showing overall contributions and disbursements, total plan balances,
the number of plan participants, how employees are electing to invest their funds and
other information useful to the Committee to ensure the plan is providing value to
participants.
4. The vendor provides onsite education services to plan participants to help them
understand the plan and optimize their savings through the plan. These services are
provided through periodic group information sessions on a wide range of retirement
savings topics, individual consultations with a Retirement Plan Specialist, and individual
sessions with a Certified Financial Planner. Education services are also available online,
through virtual appointments, and by using the vendor’s mobile app.
COMMISSION AGENDA – Action Item No. 8e Page 4 of 6
Meeting Date: April 28, 2026
Template revised June 27, 2019 (Diversity in Contracting).
5. The vendor provides various other administrative support services to the plan including
processing loans available through the plan, administering the Hardship Withdrawal
process, distribution services when plan participants are ready to begin withdrawing their
account balances, and required tax forms when participants withdraw funds from their
account.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – The Port could opt to discontinue the deferred compensation plans and require
all accounts be liquidated.
Cost Implications: There would be some costs associated with closing the down the plans that
may include outside education services and communications.
Pros:
(1) This will eliminate the need for competitive procurement every 5 to 10 years.
Cons:
(1) This would eliminate a valued element of the Port’s Total Rewards Package the dimmish
the value of the Port’s overall benefit offerings. Over 2,000 employees participate in
one or multiple Deferred Compensation Plans. This could jeopardize the Port’s ability to
attract and retain employees.
(2) This may not be possible without collective bargaining as many collective bargaining
agreements list the 457 plan amount the offered benefits to their represented
employees. Additionally, both the Policy and Fire 401(a) plans are part of the respective
departments’ collective bargaining agreements.
(3) Port employees both active and retired would be burdened to find alternative tax-
deferred plans and initiate balance transfers or be subject to tax penalties for balance
liquidation.
This is not the recommended alternative.
Alternative 2 – The Port could move to administer the Deferred Compensation plans in-house
rather than with a third party administrator.
Cost Implications: The costs associated with this plan would be in technology and development
and additional FTE.
Pros:
(1) This will eliminate the need for competitive procurement every 5 to 10 years.
(2) After initial high costs for implementation, the costs may remain lower.
Cons:
(1) This is not a recommended best practice. It is most recommended to administer
through a reliable and specialized vendor.
COMMISSION AGENDA – Action Item No. 8e Page 5 of 6
Meeting Date: April 28, 2026
Template revised June 27, 2019 (Diversity in Contracting).
(2) Administering the plan could expose the Port to potential liability associated with
record keeping and investment errors. Vendors would absorb these costs if the rare
situations that may occur.
(3) Additional staff would need to be hired that have the knowledge and experience to
perform the same duties as a specialized vendor. It would be anticipated that some
education services would need to be outsourced and that would add additional costs.
(4) The Port does not have a system or software that is needed and would have to invest
in a robust record keeping system for tracking contributions, investments and
performing the necessary reporting. This is estimated to be a very high up front fee.
This is not the recommended alternative.
Alternative 3 – The Port could join the Washington State Deferred Compensation Plan in lieu of
administering the unique Port of Seattle plans.
Cost Implications: The State plan administrative fees are not flat rate and are a percent of assets.
The costs of the first 5-years would be similar to a flat rate contract, but would increase as
account assets grew.
Pros:
(1) The State administers a well run 457 deferred compensation plan.
(2) Many other public agencies in Washington participate in the State Deferred
Compensation Plan so this could make retirement account transition easier for
employees that come to the Port of Seattle from those employers.
Cons:
(1) The State does not offer the loan provision like the Port.
(2) The State has many centralized resources, but does not offer the onsite and/or Port
specific education services.
(3) The State does not offer all the of the Secure Act 2.0 catch-up categories only the 50+.
(4) The Deferred Compensation Committee would not be local to the Port and employees
would not be represented by colleagues when plan or investment options are being
considered.
(5) The State only offers the 457 Plan so separate record keeping strategy and
administrator would need to considered for the 401(a) plans.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Expense
Total
AUTHORIZATION
Previous authorizations 3/22/2016
$4,250,000
$3,000,000
Current request for authorization
$3,477,000
$3,477,000
Total authorizations, including this request
$7,727,000
$6,477,000
Remaining amount to be authorized
$0
$0
COMMISSION AGENDA – Action Item No. 8e Page 6 of 6
Meeting Date: April 28, 2026
Template revised June 27, 2019 (Diversity in Contracting).
Annual Budget Status and Source of Funds
The Port paid fees associated with this contract are included in the Port’s benefits budget each
year. They are incorporated into the total budgeted amount and then allocated to departments
along with other benefits items such as life insurance premium costs, disability insurance costs,
and medical and dental plan costs.
ATTACHMENTS TO THIS REQUEST
No attachments.