HomeMy WebLinkAbout09 APPROVAL OF NATIONWIDE DEFERR. COMP. ADM. SVCS.• Agenda Item 9
AGENDA REPORT Reviewed:
City Manager
IN Finance Director
MEETING DATE: AUGUST 18, 2015
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: APPROVAL OF NATIONWIDE RETIREMENT SOLUTIONS, INC.
AGREEMENT FOR CALIFORNIA 457(8) DEFERRED COMPENSATION
PLAN ADMINISTRATIVE SERVICES
SUMMARY:
Nationwide Retirement Solutions, Inc. (Nationwide) has provided Section 457(b)
deferred compensation plan (457 Plan) administrative services to the City for 15 years.
This agreement updates Investment Committee recommendations and provides
employees with reasonable fees.
STAFF RECOMMENDATION:
Staff recommends that the City Council approve the agreement with Nationwide for 457
Plan administrative services.
FISCAL IMPACT:
There is no fiscal impact to the City for the administration of the employee deferred
compensation plan.
BACKGROUND:
The Investment Committee and Fiduciary Experts LLC, the consultant the City contracted
with to monitor the City's 457 Plans to meet its fiduciary responsibilities, looked at best
practices for monitoring and providing oversight of the 457 Plans. One of the best
practices was to analyze each plan and benchmark them with outside plans to compare
costs and investment offerings. Negotiations with Nationwide began immediately after the
benchmark report was issued. The main areas of negotiation were to increase services,
lower costs, and improve investment options offered to the participants. The attached
agreement is the result of the negotiations. This agreement with Nationwide and the City
of Tustin has allowed the City to achieve better terms and maintain compliance as
fiduciaries of the plan assets.
Nationwide's current pricing on the 457 deferred compensation plan is a blended asset
based fee of approximately 124 basis points (1.24%) of which 0.86 basis point (0.86%) is
solely for recordkeeping fees to administer the plan. To reduce those costs and give the
participant more investing flexibility, the annuity product was removed and an open model
APPROVAL OF NATIONWIDE RETIREMENT SOLUTIONS INC AGREEMENT FOR 457 PLAN ADMINISTRATIVE SERVICES
August 18, 2015 Page 2
architecture was selected which allows for mutual funds, eliminates administrative costs,
improves the quality of investment selections, and decreases the recordkeeping costs to
23 basis points (0.23%). The annual savings to the 457 Plan with Nationwide as a result
of the significant reduction in recordkeeping fees will be approximately $170,100 and will
grow as the assets grow in the plan. These savings will be passed on to each participant's
account.
The Investment Committee and Fiduciary Experts LLC have negotiated the following
improvements under the Nationwide Agreement:
• Converting from an annuity product to Net Asset Value mutual fund open
architecture structure;
• Control and choice for the Investment Committee to choose and use funds outside
of the proprietary type (Nationwide Investments);
• Using Index Funds and Institutional Funds;
• Non -Proprietary Target Date Funds;
• Electronic system and administrative support for paperless enrollment, beneficiary
changes, loans, and requests via online or by phone with record keeper;
• Model Portfolio system using fund line ups that create diversified investment
portfolios at no extra cost nor any hidden fees for such management;
• Managed Portfolios available at half the cost for participants who prefer to use this
option;
• Education and on-site representatives available per City's needs and requests;
• Education and Seminars available for participants with special interests in planning,
investments, pension, etc.
Pamela Arends-King Q
Finance Director/City Treasurer
Attachment: Nationwide Retirement Solutions Inc. agreement
City of Tustin, California 457(b) Deferred Compensation
Plan
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is effective the 18th day of August,
2015, by and between Nationwide Retirement Solutions, Inc., a Delaware corporation (hereinafter
"Nationwide"), an affiliate and subsidiary of Nationwide Financial Services, Inc., and City of Tustin,
California, a municipal corporation ("Employer").
WHEREAS, Employer, pursuant to and in compliance with the Internal Revenue Code of 1986,
as amended (hereinafter referred to as the "Code"), established and sponsors a Section 457 Plan
(hereinafter the "Plan"); and
WHEREAS, the Employer desires to have Nationwide perform the nondiscretionary
recordkeeping and administrative services described in this Agreement or delegated to Nationwide in the
Plan document (hereinafter referred to as "Administrative Services"); and
WHEREAS, Nationwide desires to provide such Administrative Services subject to the terms
and conditions set forth in this Agreement.
NOW THEREFORE, Nationwide and Employer hereby enter into this Agreement and agree to
abide by the terms and conditions set forth herein.
DESIGNATION
Employer designates Nationwide as Employer's non -discretionary provider of Administrative
Services for the Plan in accordance with the terms of this Agreement.
2. APPOINTMENTS AND RESPONSIBILITIES
Employer:
Employer is responsible for maintaining the Plan and for maintaining the tax -qualified status of
the Plan. Employer represents and warrants that the Plan has been properly adopted and
established in accordance with any applicable state or local laws or regulations governing the
Employer's ability to sponsor the Plan. Employer warrants that the 457 Plan was established, and
will be maintained by Employer, in accordance with the provisions of Section 457 of the Code.
Employer further acknowledges and agrees the Employer is an eligible governmental employer as
defined by Section 457(e)(1)(A) of the Code.
Employer hereby appoints Nationwide to act as the Employer's provider of Administrative
Services for the Plan. Any duties or services not specifically described herein as being provided
by Nationwide are the responsibility of the Employer.
Nationwide:
Nationwide will serve Employer, in a non -fiduciary capacity, as the provider of Administrative
Services for the Employer with respect to the Plan. Nationwide will not exercise any
discretionary control or authority over the Plan or the assets of the Plan, and this Agreement does
not require Nationwide to do so. Nationwide agrees to perform all Administrative Services for
the Employer with respect to the Plan as described in this Agreement. This Agreement does not
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require, nor shall this Agreement be construed as requiring, Nationwide to provide investment,
legal, or tax advice to the Employer or to the participants of the Plan.
3. TERM
The initial contract period shall be for five (5) years and run from August 18, 2015 to August 17,
2020, unless sooner terminated as provided in Section 8 of this Agreement. This Agreement may
be extended thereafter for two (2) additional one (1) -year periods by mutual written consent of
the parties.
4. COMPENSATION
A. The Plan Sponsor acknowledges that Nationwide and its affiliates receive payments in
connection with the sale and servicing of investments allocated to participant Plan
accounts ("Investment Option Payments") made by Nationwide's affiliates or unaffiliated
companies under their separate arrangements. In addition to the foregoing, the parties
acknowledge and agree that Nationwide may receive revenue associated with annuity
contracts, as well as fees associated with specific services or products. Exhibit A to this
Agreement contains additional information regarding mutual fund payments.
B. As compensation for the performance of the Administrative Services provided by
Nationwide pursuant to this Agreement, Employer and Nationwide agree that Nationwide
shall be entitled to receive a portion of the Investment Option Payments equal to .20
percent (20 basis points) annually of the average total monthly values of the Plan's assets
held by Nationwide based on month-end values ("Compensation Requirement"). In
calculating the 20 basis points, the average monthly values of assets will not include
assets held in the Self -Directed Brokerage Account ("SDBA") or assets distributed to
participants as loans. Nationwide's Compensation Requirement shall first be taken from
the revenue Nationwide receives from Investment Option Payments. If the
Compensation Requirement is not sufficiently satisfied through Investment Option
Payments, a flat administration fee will be charged to all participant accounts with an
account balance to make up the difference
Nationwide will provide the Employer a quarterly report showing total participant
account balances and the corresponding fee calculation within thirty (30) business days
after the end of each quarter. Upon request of the Employer, Nationwide shall provide
all documents and information reasonably required to substantiate the fee calculation,
Compensation Requirement, and amount of Investment Option Payments.
C. The Plan's' investment option line-up will be reviewed as mutually agreed upon to
determine any shortfall or overage. If changes to the Plan's fund line-up are necessary,
Nationwide will work with the Employer to address necessary changes.
D. The Employer has directed Nationwide to establish and maintain a separate account (the
"Plan Expense Account") representing that portion of the Investment Option Payments
that exceed .20 percent of the average total monthly values of the Plan's assets held by
Nationwide based on month-end values ("Excess Investment Option Payments"). The
Plan Expense Account will be funded on a quarterly basis. The Employer will select a
single investment vehicle to be used for the Plan Expense Account, which cannot be an
investment vehicle included in the participant investment option line-up. The Employer
will direct Nationwide, in writing, to pay reasonable and necessary Plan expenses directly
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to a Plan service provider. When each invoice is submitted to Nationwide for payment,
the Employer shall certify in writing that the expenses represented by the invoice are
reasonable and necessary Plan expenses. As the fiduciary of the Plan, the Employer is
responsible for making determinations with respect to the appropriateness of all expenses
of the Plan and how the Plan Expense Account is managed. Nationwide does not accept
this responsibility.
E. The account balance, account transactions and investment experience of the Plan Expense
Account will be reported to the Employer no later than thirty (30) "Business Days" after
the end of each calendar quarter. As used in this Agreement, the term "Business Day"
means each Monday through Friday that the New York Stock Exchange is open for
business.
The Employer will maintain the cumulative balance held in the Plan Expense Account at
a reasonable level given the size of the Plan and the Plan's total annual expenses. Should
the cumulative balance of the Plan Expense Account exceed a reasonable level, Employer
will direct Nationwide to allocate any excess accumulation to participant accounts based
on their total account balance.
G. At the direction of Employer, any balance in the Plan Expense Account that has not been
applied to pay for reasonable and necessary Plan expenses can be allocated to participant
accounts based on their total account balance on an annual basis to be mutually
determined and agreed to by the parties.
H. The Employer may request Nationwide and/or its affiliates to provide additional services
not described in this Agreement by making such a request in writing, which Nationwide
may decide to perform for compensation to be negotiated by the parties prior to the
commencement of the additional services.
SEPARATE PARTICIPANT FEES
Loans - All participant loan fees are governed by Nationwide's Plan Loan Procedures
document.
2. Self -Directed Brokerage Account (SDBA) (if elected by the Employer) -The SDBA
investment option is available for qualifying participants in the Plan. There is a non-
refundable initial fee of $50, which is deducted from the participant's account. Thereafter,
a $50 annual administrative fee will be deducted from the participant's account. In
addition, Charles Schwab & Co. Inc. may assess transaction and other fees related to the
SDBA.
Managed account (Nationwide ProAccount) services are expressly excluded from this
Agreement. Managed account services are offered by an affiliate of Nationwide,
Nationwide Investment Advisors, LLC ("NIA"), and the Employer must execute a
separate agreement with the affiliate. Only participants who choose managed account
services are assessed fees. Such fees are authorized in a separate agreement between the
participant and NIA, and are assessed pursuant to the terms and conditions of the services
agreement.
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5.
6.
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Nationwide agrees to accept participant contributions to the Plan which shall be invested in the
investment options selected for the Plan by the Employer and agreed to by Nationwide.
Nationwide agrees to provide open architecture with regard to investment option replacements,
with the understanding that the Employer will target mutual fund revenue of 0.20 percent (20
basis points) to meet the Compensation Requirement of Nationwide. Should any revised
investment lineup not provide sufficient revenue to satisfy the Compensation Requirement, a flat
administration fee will be charged to all participant accounts with an account balance to make up
the difference.
Employer agrees to accept the terms and conditions of the annuity contracts, mutual funds, and
any other investment products selected for the Plan.
ADMINISTRATION SERVICES
A. PARTICIPANT ENROLLMENT AND COMMUNICATION/EDUCATION SERVICES
Nationwide agrees to establish an account for each Plan participant, beneficiary and alternate
payee (for purposes of this Agreement only, hereinafter referred to as "participants"). For each
such account, Nationwide will record and maintain the following information, provided
Nationwide is provided with same:
(a) name;
(b) Social Security number;
(c) mailing address;
(d) date of birth;
(e) current investment allocation direction;
(t) contributions allocated and invested;
(g) investment transfers;
(h) benefit payments;
(i) current account balance;
0) transaction history since funding under the Agreement;
(k) contributions since funding under the Agreement;
(1) beneficiary designations;
(m) e-mail address (optional);
(n) benefit tax withholding information; and
(o) such other information as agreed upon by the Employer and
Nationwide.
Nationwide only maintains the above information for a period of seven (7) years from the date the
plan is last funded with Nationwide.
Nationwide will post and credit the amounts transmitted by the Employer to the accounts of Plan
participants in accordance with the latest instructions from participants or the Employer (as
applicable) on file with Nationwide, which instructions may include direction via electronic
sources such as the participant website or the interactive voice response system.
Nationwide agrees to process the enrollment of employees eligible to participate in the Plan as
determined by the Employer. Nationwide also agrees to conduct enrollment meetings with
Employer's employees in such number and manner as determined by the parties in a separate
agreement. The Employer agrees to allow and facilitate the periodic distribution of materials to
Plan participants at the time and in the manner determined by the Employer; provided however,
that all reasonable expenses associated with such distribution shall be paid by Nationwide. The
Employer further agrees to allow and facilitate the periodic distribution to its employees of
materials prepared by Nationwide regarding products and services offered by Nationwide, or its
affiliates, which Nationwide reasonably believes would be beneficial to such Plan participants.
B. PLAN CONTRIBUTIONS
Nationwide agrees to post funds received as participant contributions to the Plan in accordance
with that separate agreement between Employer and NLIC when received from the Employer in
good order by Nationwide. The term "in good order," as used in this Agreement, means the
receipt of required information by Nationwide, in a form deemed reasonably acceptable to
Nationwide (in Nationwide's sole discretion), with respect to the processing of a request or the
completion of a task by Nationwide that reasonably requires information from a third -party.
More specifically, Plan contributions and contribution allocation information must meet all of the
following requirements in order to be deemed to be in good order:
1. All records must include the participant name, Social Security number, and the amount to
be credited to the participant's account(s);
2. The source of funds must be identified (e.g., 457(b) salary reduction);
3. The Plan name and Plan number must be clearly identified;
4. Both the participant allocation detail and the total contribution amount must be received,
and these two totals must match each other;
5. All participants receiving a contribution must have an active account in the Plan; and
6. Separate files are required for each plan.
Funds may be sent by wire transfer, through an automated clearinghouse or by check in
accordance with written instructions provided by Nationwide. Failure to follow the written
instructions provided by Nationwide may result in delay of posting to participant accounts.
All contribution allocation information with respect to participant accounts will be provided to
Nationwide in a mutually agreed upon electronic or paper format.
If all of the above requirements are met by the close of the New York Stock Exchange,
contributions will be processed by Nationwide the same business day. The transactions that do
not meet the above requirements are not deemed to be in good order as defined above, and
Nationwide shall notify the Employer of such determination within twenty-four (24) business
hours of the Business Day received. After such notification, the parties will continue to try to
resolve the not in good order status, but if resolution is not achieved, Nationwide shall return the
funds to the Employer within thirty (30) Business Days. Nationwide will not be liable for any
delay in posting if the Employer fails to send the funds representing contribution amounts or
contribution allocation information in accordance with the good order requirements outlined in
this Agreement.
As used in this Agreement, the term "Business Day" means each Monday through Friday that the
New York Stock Exchange is open for business. No transactions can be completed on any
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Business Day after 4:00 p.m. Eastern Time, or if earlier, after such time as the New York Stock
Exchange closes.
The Employer is responsible for providing updated information regarding Plan participants
requested by Nationwide that the Employer and Nationwide mutually agree is necessary for
Nationwide to perform the Administrative Services to the Employer under this Agreement.
C. SERVICES WITH RESPECT TO PARTICIPANT PLAN ACCOUNTS
1. Nationwide will provide a secure Internet site. Using this site, participants may: (i)
obtain information regarding their accounts, and (ii) conduct transactions with respect to
their accounts. The Employer authorizes Nationwide to honor instructions regarding
such transactions that may be submitted by a participant using the secure Internet site.
Nationwide will operate its Internet site in accordance with reasonable precautions to
ensure the security of such service.
2. Participants will have the unlimited ability to increase (within the limitations of Section
457 of the Code) or decrease contributions to the Plan. All requests to increase or
decrease contribution amounts will be processed by Nationwide within five (5) Business
Days of receipt of the request, but cannot be effective until the later of (1) the first of the
calendar month following the month in which the contribution change was requested, and
(2) the date the contribution change can be processed by the Plan Sponsor given Plan
Sponsor's payroll processing schedule.
3. Participants will have the ability to exchange existing account balances, in full or in part,
and to redirect future contributions from one investment option offered by the Plan to
another on any Business Day, subject to Nationwide policies and any restrictions applied
by the investment options.
4. Participants will receive consolidated quarterly statements detailing their account activity
and account balances for the Plan. Participants shall be informed that they must notify
Nationwide of any errors within forty-five (45) days of receipt of their statements or
confirmation of their investments. Nationwide will not be liable for any errors not
reported within this time frame.
Nationwide agrees to deliver account statements (by U.S. mail or electronically) to
participants within twenty (20) calendar days after the end of each calendar quarter. This
timeframe is contingent upon Nationwide receiving index fund returns from the mutual
fund providers within four (4) Business Days after the end of each quarter. The delivery
of participant statements by Nationwide will generally be delayed by one Business Day
following the end of the calendar quarter for each Business Day the index fund returns
are delayed beyond the initial four (4) Business Days envisioned by this Agreement.
6. Nationwide agrees to provide reports to the Employer within thirty (30) days following
the end of each calendar year quarterly reporting period (March 31, June 30, September
30, and December 31) summarizing the following:
a) All participant activity that transpired during the reporting period;
b) Total contributions allocated to each investment or insurance option under the Plan;
and
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c) Total withdrawals by participant. This report shall include the amount, type and date
of withdrawal.
7. Nationwide agrees to maintain, for a reasonable amount of time, the records necessary to
produce any required reports. Employer agrees that all related computer tapes, disks and
programs shall remain the property of Nationwide.
D. DISTRIBUTIONS
1. Employer shall notify Nationwide, in writing or electronically, within fourteen (14)
business days of a participant's separation from service for any reason.
2. Nationwide shall make all distributions as permitted by the Plan. All distributions will be
made pro -rata from each of the participant's investment options unless directed otherwise
by the participant. Participants are responsible for selecting a form of payment from
those available under the terms of the Plan and making all other elections regarding
available distribution options, such as rollover elections.
3. Nationwide shall furnish each participant who has received a benefit payment tax
reporting forms in the manner and time prescribed by federal and state law. Employer
shall be responsible for all tax reporting requirements for periods prior to the effective
date of this Agreement, or after the termination date of this Agreement, unless otherwise
agreed to in writing by the parties to this Agreement.
4. To the extent required by federal and state law, Nationwide will calculate and withhold
from each benefit payment federal and state income taxes. Nationwide will report such
withholding to the federal and state governments as required by applicable law.
Employer shall be responsible for all tax reporting requirements for periods prior to the
effective date of this Agreement, or after the termination date of this Agreement, unless
otherwise agreed to in writing by the parties to this Agreement.
E. QUALIFIED DOMESTIC RELATIONS ORDERS (QDROS)
If the Plan accepts Qualified Domestic Relations Orders (hereinafter "QDROs"), Nationwide
agrees to perform the analysis required to determine whether or not a domestic relations order
received by the Plan satisfies the requirements to be deemed a QDRO unless the Employer
indicates otherwise. Nationwide agrees to process all QDROs submitted on or after the effective
date of this Agreement in accordance with its standard QDRO procedures, which have been
provided to, and approved by, the Employer.
Nationwide's QDRO procedures shall include a determination of the amount of the alternate
payee's award. Nationwide will establish an alternate payee account or process a distribution
pursuant to the terms of the QDRO, the Plan, and/or the Internal Revenue Code of 1986, as
amended (hereinafter the "Code") requirements in effect on the date of the distribution, as long
as a distribution request is received in good order and in a manner satisfactory to Nationwide. In
those cases where the determination of the amount due to the alternate payee is dependent on the
receipt of participant account history that resides with a prior service provider ("prior account
history"), Nationwide can only include such prior account history in the determination of the
amount due to the alternate payee if it receives the prior account history from the prior service
provider.
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F. UNFORESEEABLE EMERGENCY WITHDRAWALS .
Employer instructs Nationwide to process all unforeseeable emergency withdrawal requests
received in good order, and in a manner satisfactory to Nationwide, due to an unforeseeable
emergency resulting in a severe financial hardship to the participant or beneficiary that cannot be
alleviated by any other means available to the participant. Nationwide agrees to process all
participant requests for unforeseeable emergency withdrawals in accordance with its standard
unforeseeable emergency procedures, which have been provided to, and approved by, the
Employer.
7. PARTICIPANT SERVICES
A. WEBSITE
Nationwide will create and maintain a website for and on behalf of the Employer for the use of its
participants. Participants may access the website via the intemet at www.nrsforu.com to review
and make changes to their accounts. The website is the exclusive property of Nationwide.
The website is available twenty-four (24) hours a day, except for routine maintenance of the
system.
B. AUTOMATED VOICE RESPONSE SYSTEM
Nationwide will provide an interactive voice response (IVR) toll free telephone number, which
shall be operative twenty-four (24) hours per day, seven (7) days per week (less normal
maintenance time).
Participants shall be able to conduct routine plan transactions and obtain account balance
information through the IVR. The Employer authorizes Nationwide to honor participant
instructions, which may be submitted by participants pursuant to their personal identification
number (PIN) using the toll-free number, either through the fVR or a live representative.
C. CUSTOMER SERVICE
Nationwide's customer service representatives will be available toll-free from Nationwide's
Home Office to answer participant questions and process applicable transactions between the
hours of 5:00 a.m. Pacific Time and 8:00 p.m. Pacific Time each Business Day.
8. TERMINATION
Either the Employer or Nationwide may terminate this Agreement for any reason upon providing
one hundred and twenty (120) days written notice to the other party. Provision of such written
notice of termination by Employer to Nationwide does not relieve the Employer of any
termination requirements that may be associated with specific investment options. Employer
further acknowledges and agrees that the Plan is responsible for any investment product
liquidation fees, if applicable, and that neither Nationwide nor any of its affiliates assumes
liability for any such fees.
Upon notice of termination, Nationwide agrees to continue to provide the Administrative Services
set forth in this Agreement in good faith for a period of time, or until these responsibilities are
transitioned.
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Upon the effective date of termination of this Agreement, whether due to the events described in
this Section 8 or those in Section 9 of this Agreement, the following shall occur:
A. Nationwide will no longer accept any additional deferrals to the Plan except by
mutual agreement of the parties.
B. On the effective date of termination pursuant to this Section, or as otherwise
agreed upon by the parties, Nationwide will provide the Employer, or such other
entity as the Employer may designate in writing, a copy of all records relating to
services rendered under this Agreement, including participant sub -accounts, in a
format and media agreed upon by the parties.
C. On the effective date of termination pursuant to this Section, or as otherwise agreed upon
by the parties, Nationwide will transfer all Plan assets under its control to the Employer
or to such other entity as the Employer may designate in writing. Nationwide agrees to
provide a final accounting of all Plan assets for which Nationwide provides
recordkeeping.
D. Nationwide shall be entitled to receive just and equitable compensation for work in
progress, work completed and materials accepted before the effective date of the
termination.
9. DEFAULT
In the event the Agreement is terminated for "Cause" (which shall mean the failure of either party
to perform any or all of its obligations as defined herein), the non -defaulting party shall give the
defaulting party written notice, specifying the particulars of the default. If such default is not
cured within sixty (60) days from the date in which notice of default is given, the non -defaulting
party may terminate the Agreement effective thirty (30) days after the end of the sixty (60) day
period.
If Nationwide becomes insolvent or is declared bankrupt or commits any act of bankruptcy or
insolvency or makes an assignment for the benefit of creditors, the Employer may terminate the
Agreement by providing Nationwide with thirty (30) days written notice of termination. If the
Agreement is terminated pursuant to this paragraph, Nationwide will only be entitled to receive
any payments due for services performed pursuant to this Agreement through the date of
termination.
10. INSURANCE
Without limiting the Employer's right to obtain indemnification from Nationwide or any third
parties, Nationwide, at its sole expense, shall maintain in full force and effect, the following
insurance policies throughout the term of the Agreement:
A. General Liability
General Liability Insurance with limits of not less than One Million Dollars ($1,000,000.00) per
occurrence and an annual aggregate of Two Million Dollars ($2,000,000.00). This policy shall be
issued on a per occurrence basis.
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B. Automobile Liability
Automobile Liability Insurance on an occurrence basis with a per occurrence limit of at least Five
Million Dollars ($5,000,000.00). Nationwide will also maintain an umbrella policy that would
respond to any occurrence that exceeds the Five Million Dollars ($5,000,000.00) underlying
Automobile Liability limit. Coverage will include owned and non -owned vehicles used in
connection with this Agreement.
C. Professional Liability / Errors and Omissions
If Nationwide employs licensed professional staff (e.g., Ph.D., R.N., L.C.S.W., M.F.C.C.) in
providing services, Professional Liability Insurance with limits of not less than Ten Million
Dollars ($10,000,000.00) per claim, Thirty Million Dollars ($30,000,000.00) policy period
aggregate.
11. ASSIGNABILITY
No party to this Agreement shall assign the same without the express written consent of the other
party. This provision shall not restrict Nationwide's right to delegate certain services to an agent,
including any affiliate. Unless agreed to by the parties, no such assignment shall relieve any
party to this Agreement of any duties or responsibilities herein.
12. CONFIDENTIALITY
Nationwide agrees to maintain all information obtained from or related to all Plan participants as
confidential. The Employer and Nationwide agree that Nationwide, its officers, employees,
brokers, registered representatives, affiliates, vendors and professional advisors (such as
attorneys, accountants and actuaries) may use and disclose Plan and participant information only
to enable or assist it in the performance of its duties hereunder and with other Plan -related
activities, and the Employer expressly authorizes Nationwide to disclose Plan and participant
information to its agents and/or broker of record on file with Nationwide. Plan and participant
information may also be used or disclosed by Nationwide to other third parties pursuant to a
written authorization signed by the Employer. Notwithstanding anything to the contrary
contained herein, it is expressly understood that Nationwide retains the right to use any and all
information in its possession in connection with its defense and/or prosecution of any litigation
which may arise in connection with this Agreement, the investment arrangement funding the
Plan, or the Plan; provided, however, in no event will Nationwide release any information to any
person or entity except as permitted by applicable law.
This Section 12 will survive the termination for any reason of this Agreement.
13. CIRCUMSTANCES EXCUSING PERFORMANCE
Neither party to this Agreement shall be in default by reason of failure to perform in accordance
with its terms if such failure arises out of causes beyond their reasonable control and without fault
or negligence on their part. Such causes may include, but are not limited to, Acts of God or
public enemy, acts of the government in its sovereign or contractual capacity, fires, floods,
epidemics, quarantine or restrictions, freight embargoes, and unusually severe weather.
Neither party shall be responsible for performing all or any portion of the services contemplated
by this Agreement that are precluded by the foregoing events for such period of time as the
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14.
Employer or Nationwide are prevented from performing such services in the normal course of
business. Neither Nationwide nor the Employer shall be liable for lost profits, losses, damage or
injury, including without limitation, special or consequential damages, resulting in whole or in
part from the foregoing events.
"Acts of God" are defined as acts, events, happenings or occurrences due exclusively to natural
causes and inevitable accident or disaster, exclusive from all human intervention.
Nationwide agrees to indemnify, defend and hold harmless Employer, together with Employer's
officers, directors, agents, and employees, from and against any loss, damage or liability assessed
against Employer or incurred by Employer arising out of or in connection with any claim, action,
or suit brought or asserted against Employer alleging or involving Nationwide's non-
performance of the provisions of this Agreement under Nationwide's control, or negligence or
willful misconduct in the performance of Nationwide's services, duties and obligations under this
Agreement. The only exception to Nationwide's obligation to indemnify, defend and hold
harmless Employer is due to Employer's non-performance of the provisions of this Agreement
under Employer's exclusive control, or the negligence or willful misconduct of Employer in the
performance of Employer's services, duties and obligations under this Agreement.
15. PARTIES BOUND
This Agreement and the provisions thereof shall be binding upon and shall inure to the benefit of
the successors and assigns of Nationwide and the Employer. The Plan and Plan participants are
not parties to this Agreement, and Nationwide has no contractual obligations to the Plan or Plan
participants. This Agreement shall be enforceable only by the parties, not by Plan participants or
other third -parties, and is intended to create no third party beneficiaries.
16. NOTIFICATION
All notices, requests, demands or other communications provided for or required by this
Agreement (or any instrument or document delivered pursuant to this Agreement) will be in
writing.
Notices to Nationwide will be addressed as follows:
Nationwide Retirement Solutions
Attn: Vice President of Sales
10 W. Nationwide Blvd, 5-02-207V
Columbus, OH 43215
Notices to Employer will be addressed as follows:
City of Tustin
Attn: Pamela Arends-King
300 Centennial Way
Tustin, CA 92780
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APPLICABLE LAW AND VENUE
This Agreement shall be governed and construed in accordance with the laws of the State of
California. ]n the event of any legal action to enforce or interpret this Agreement, the sole and
exclusive venue shall be a court of competent jurisdiction located in Orange County, California.
MODIFICATION
This writing is intended both as the final expression of the Agreement between the parties and as
a complete statement of the terms of the Agreement. Notwithstanding anything contained herein
to the contrary, this Agreement may be amended from time to time and as mutually agreed upon
by the patties. Except as otherwise provided herein, no modification of this Agreement shall be
effective unless and until such modification is evidenced by a writing signed by both parties.
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The failure of either party to enforce any provision of this Agreement shall not be construed as a
waiver of that provision or of any other provision in this Agreement and either party may, at any
time, enforce the provision previously unenforced, unless a modification to this Agreement has
been executed that affects the provision previously unenforced.
SEVERABILITY
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction where
performance is required shall be ineffective to the extent such provision is prohibited or
unenforceable without invalidating the remaining provisions, and any such prohibition or
unenforceable provision in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
LEGAL ADVICE
Nothing in this Agreement is intended to constitute legal or tax advice from Nationwide to the
Employer or any other party.
AUTHORIZED PERSONS
The Employer will furnish a list to Nationwide
changes therein) of the individuals authorized to
the Plan and/or assets in the account, and w
instructions.
ENTIRE AGREEMENT
(and from time to time whenever there are
transmit instruction to Nationwide concerning
ritten direction regarding the form of such
This document and any subsequent amendments thereto represent the entire agreement between
the parties with respect to the subject matter of this Agreement. Nationwide may amend this
Agreement without the Employer's approval or signature when such amendment is required in
order to comply with changes to applicable law; Nationwide will provide Employer with thirty
(30) days written notice of such amendment prior to the date on which such amendment is to be
effective. No other amendments shall be made to this Agreement except as mutually agreed to in
writing and signed by the authorized agents of each party.
24. COMPLIANCE WITH LAWS
Both the Employer and Nationwide agree to comply, in their respective roles under this
Agreement, in all material respects with all applicable federal laws and regulations as they affect
the Plan and the administration thereof. Nothing contained herein shall be construed to prohibit
either party from performing any act or not performing any act as either may be required by
statute, court decision, or other authority having jurisdiction thereof.
25. PRIVITY OF CONTRACT
The Employer acknowledges and agrees that only Nationwide and the Employer have the right to
enforce any rights or obligations hereunder and that this Agreement does not confer any rights or
impose any obligations on any third party.
26. HEADINGS
The headings of articles, paragraphs, and sections in this Agreement are included for convenience
only and shall not be considered by either party in construing the meaning of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective on the date
written above.
NATIONWIDE RETIREMENT SOLUTIONS, CITY OF TUSTIN, Employer
INC.
an
Authorized Signer
Printed Name:
Date:
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Printed
Authorized Signer
Exhibit A
Mutual Fund Payments Disclosure
Our Relationships with the Mutual Funds
Nationwide Retirement Solutions, Inc., offers a variety of unregistered group variable annuity
contracts and mutual fund platforms (collectively referred to as "retirement products"). Those
retirement products are sold exclusively in the public sector retirement markets through
Nationwide 's life insurance and trust company affiliates (collectively referred to as the
"Nationwide companies")
The variable accounts, trust accounts, or custodial accounts (the "Accounts") that accompany the
retirement products offer investment options, and purchase and sell shares of certain mutual
funds in the aggregate each day so that the performance of the investment options corresponds to
the performance of those mutual funds. When the Accounts aggregate these transactions, the
mutual fund does not incur the expense of processing individual transactions that it would incur
if it sold its shares to the public directly. This expense is instead incurred by the Nationwide
companies.
Nationwide companies also incur the distribution costs associated with selling the retirement
products, which benefits the mutual funds by providing contract owners and participants with
investment options that correspond to the underlying mutual funds.
An investment adviser or subadviser of a mutual fund or its affiliates may provide the
Nationwide companies with wholesaling services that assist in the distribution of the retirement
products and may pay to participate in educational and/or marketing activities. These activities
may provide the adviser or subadviser (or their affiliates) with increased exposure to persons
involved in the distribution of the retirement products.
Types of Payments the Nationwide Companies Receive
In light of the above, certain mutual funds or their affiliates make payments to the Nationwide
companies (the "payments"). The amount of these payments is typically based on an agreed upon
percentage times the amount of assets that the Accounts invest in the mutual funds.
These payments may be used for any corporate purpose, which includes reducing the price of the
retirement products, paying expenses that the Nationwide companies incur in promoting,
marketing, and administering the retirement products, and achieving a profit.
The Nationwide companies receive the following types of payments:
• Mutual fund 12b-1 fees, which are deducted from mutual fund assets;
• Sub -transfer agent fees or fees pursuant to administrative service plans adopted by the mutual
fund, which may be deducted from mutual fund assets; and
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• Payments by a mutual fund's adviser or subadviser (or its affiliates). Such payments may be
derived, in whole or in part, from the advisory fee that is deducted from mutual fund assets
and reflected in the mutual fund charges.
Furthermore, the Nationwide companies benefit when assets are invested in Nationwide's
affiliated mutual funds (i.e., Nationwide Variable Insurance Trust and/or Nationwide Mutual
Funds) because their affiliates also receive compensation from the mutual funds for investment
advisory, administrative, transfer agency, distribution, and/or other services. Thus, the
Nationwide companies may receive more revenue with respect to affiliated mutual funds than
unaffiliated mutual funds.
The Nationwide companies took these anticipated payments into consideration in determining
the charges they impose under the retirement products (apart from fees and expenses imposed by
the mutual funds). Without these payments, the Nationwide companies would have imposed
higher charges on their retirement products.
Amount of Payments the Nationwide Companies Receive
For the year ended December 31, 2013, for public sector retirement products, the maximum
payments that the Nationwide companies received from the mutual funds and their affiliates (as a
percentage of the average daily net assets of the mutual funds attributable to the retirement
products) and weighted average payments were:
Public sector retirement products* 1 0.75% 1 0296% 1
*Excludes select public sector retirement plan assets where the Nationwide companies either do not have
agreements to receive any payments from the mutual funds or do not retain payments from the mutual
funds.
** Weighted averages are the product of amounts the Nationwide companies earned, divided by annual
average mutual fund assets (using quarter end average balances). All mutual funds available in a line of
business are included when determining average mutual fund assets, regardless of whether the mutual
funds or their affiliates actually made any payments to the Nationwide companies during the year, subject
to the exclusion noted above.
Most mutual funds or their affiliates have agreed to make payments to the Nationwide
companies, although the amount of the payment may vary from mutual fund to mutual fund.
Some mutual funds may not make any payments at all.
The amount of the actual payments the Nationwide companies receive is based on an agreed
upon percentage times the amount of assets invested by the Accounts in the mutual funds. As
such, the Nationwide companies may receive higher payments from mutual funds that pay a
lower percentage than from mutual funds that pay a higher percentage because of the level of
assets invested by the Accounts.
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Opportunities to participate in educational and/or marketing activities offered by investment
advisers or subadvisers of the mutual funds or their affiliates to employees of the Nationwide
companies are not taken into account in determining the amount of payments received.
Identification of Mutual Funds Offered in Our Retirement Products
The Nationwide companies identify a menu of potential mutual funds that correspond to the
investment options for their retirement products. They may consider several criteria when
identifying those mutual funds, including some or all of the following: investment objectives,
investment process, investment performance, risk characteristics, investment capabilities,
experience and resources, investment consistency, and fund expenses.
In some cases, the Nationwide companies identify mutual funds based on requests and
recommendations made by retirement Employers and/or their advisors. Another factor the
Nationwide companies consider during this process is whether the mutual fund's adviser or
subadvisor is one of their affiliates or whether the mutual fund, its adviser, its subadviser(s), or
an affiliate will make payments such as those described above.
The Employer should consider all of the fees and charges of a retirement product in relation to
the features and benefits of that product when deciding which investment options to offer for the
Plan. The fees of the mutual funds being offered as part of the overall retirement product should
also be considered in the Employer's decision. Employer understands that higher product and
mutual fund fees and charges have a direct effect on the investment performance of the Plan's
investment options.
(Additional information is available through "Fund Payments Made to Nationwide" link on
www.nrsforu.com)
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