HomeMy WebLinkAboutRes 2015-02 - 457 Plan Nationwide Plan Sponsor AgreementCITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: CONSIDERATION OF RESOLUTION NO. 2015- 02 TO ALLOW
LOANS FROM EMPLOYEES 457 DEFERRED COMPENSATION
CONTRIBUTION ACCOUNTS WITH NATIONWIDE RETIREMENT
SOLUTIONS.
SUBMITTED BY: Paul S. Gibson, Director of Finance
DATE: January 8, 2015
CONTENTS: Proposed City of Palm Desert Resolution No. 2015- 02
Loan Program Guidelines Agreement with Nationwide
Nationwide ProAccount — Plan Sponsor Agreement
Recommendation
By Minute motion, adopt Resolution No. 2015- 02 to allow loans from employee 457 Deferred
Compensation contribution accounts with Nationwide Retirement Solutions and authorized
Finance Director to sign Loan Guidelines Agreement and ProAccount Plan Sponsor Agreement.
Background
Palm Desert City Council adopted Resolution No. 88-107 and later 2013-30, established the
Nationwide Retirement Solutions Corporation deferred compensation plan. This allows
employees to set -aside wages into employee trust account under IRS code section 457. We
currently have 30 employees that have a 457 trust account with around $4,644,000.
Several employees requested that the City consider allowing loans from their trust accounts up
to $50,000 for purpose of a house loan or emergency financial hardships. Loans could not
exceed 50% of their trust account and would accrue interest in their account of prime rate plus
2% for up to 15 years. All loans are due and payable when employee retires and starts
collecting from their account. Nationwide would deal with setting up the loans with the
employees and would require them to make payments directly with them using ACH debit
transfer from their bank account. Nationwide will charge the employee for the cost of servicing
the loan. This service is similar to what City staff took on ICMA 457 plan.
City staff is also recommending what Nationwide Investment Advisors call ProAccount which
allows employees to utilize an advisor to help manage/assist them in buying investments with
their 457 deferred compensation plans and charged a fee for utilizing this option. Employees
are currently already using this service, however, this is our formal acknowledgement allowing
this under our current plan documents with Nationwide.
Resolution No. 2015- 02
Staff Report
January 8, 2015
Page 2 of 2
Fiscal Analysis
City would not be a participant in this process other than receiving notice of loan being approved
and taken out of employee trust account. No additional cost to City for providing these services.
Submitted by:
Paul S. Gibson, Director of Finance ohn M. Wohlmuth, City Manager
G:\Finance\Niamh Ortega\Staff Reports\SR - Nationwide Deferred Comp Loan Resolutlon.DOCX
RESOLUTION NO. 2015- 02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, AMENDING EXISTING DEFINED CONTRIBUTION 457 PLAN
WITH NATIONWIDE RETIREMENT SOLUTIONS CORPORATION
AGREEMENT
WHEREAS, the City of Palm Desert has employees rendering valuable services; and
WHEREAS, the City of Palm Desert first adopted its deferred compensation in 1988
administered by the Nationwide Retirement Solutions Corporation Employer Plan Number
0037064001;and
WHEREAS, over the years the plan has been amended to reflect changes in Federal
law and the City's benefits structure; and
WHEREAS, the City of Palm Desert will permit loans under the plan as provided in
Article XIII of the Adoption Agreement and in the executed Loan Administrative Procedures and
ProAccount — Plan Sponsor Agreement; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Palm Desert,
California approve the attached Loan Administrative Procedures and ProAccount — Plan
Sponsor Agreement; and
PASSED, APPROVED AND ADOPTED at the regular meeting of the Palm Desert City
Council, held on this 8th day of January, 2015, by the following vote to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
SUSAN MARIE WEBER, MAYOR
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
Resolution No. 2015-02
GOVERNMENTAL PLANS
457(b) PLAN
PARTICIPANT LOAN ADMINISTRATIVE PROCEDURES
Nationwide Retirement Solutions, Inc. ("NRS") agrees to administer loans in accordance with the
term of these Participant Loan Administrative Procedures as approved by the Sponsor of the Plan.
The Sponsor is encouraged to consult with its legal advisors in determining whether the
procedures identified herein are appropriate for its Plan.
The Sponsor acknowledges that NRS may need to make changes from time -to -time to the
administrative procedures set forth herein and may request amendments to the Plan documents
to maintain compliance of the loan program with Internal Revenue Service guidelines. In such a
case, NRS will provide the Sponsor with timely notice of such changes as they become necessary.
The following administrative procedures shall govern participant loans offered in the Sponsor's
457(b) Plan:
1. Loan Administration. Sponsor delegates to NRS certain administrative duties regarding the
administration of loans from the Plan, which are set forth herein and which may be modified by
NRS upon timely notice to Sponsor.
2. Loan Eligibility. Any Plan participant who is an active employee at the time a loan is made is
eligible for a loan from the Plan. Each participant is entitled to one (1) loan from the Plan at any
time, and may not take out additional loans until the prior loan has been repaid in full. In addition,
a participant who has defaulted on a previous loan shall not be eligible for another loan from
the Plan until all defaulted loans are repaid in full, including accrued interest and fees.
3. Loan Application and Loan Agreement. In order to receive a loan from the Plan, an
eligible participant must complete a loan application and return it to NRS. A loan application
fee of $50.001 will be deducted from the participant's account(s) after the loan has been funded
by the participant's account(s). Before a loan is issued, the participant must enter into a legally
These fees and minimums are subject to change by NRS upon reasonable notice to the Plan Sponsor. Loan fees
will appear as administrative charges on Participant Statements.
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enforceable loan agreement as provided by NRS on behalf of the Plan. If the Sponsor permits
loans for the purchase of the participant's principal residence, the participant will be required
to sign a primary residence certificate form and provide NRS with sufficient additional
documentation to support the purchase of a principal residence.
A Plan loan shall be made only from the Before -Tax Deferral Account or, if applicable, Rollover
Accounts that are not attributable to after-tax rollovers (including rollovers of Roth accounts).
Loans may be withdrawn only from pre-tax balances, after tax money sources will not be
included in the calculation of the Participant's account for purposes of calculating availability for
a loan. Additionally, no loans will be funded from any after tax money source. To the extent that
a Participant has a self -directed brokerage account, no funding from such self -directed
brokerage account shall be permitted. To the extent that insufficient funds from non -self -directed
brokerage account are available to fund the loan, the loan shall not be approved.
4. Loan Repayment/Minimum and Maximum Loan Term. Repayment of any loan made to a
participant shall be made in a manner and pursuant to the terms set forth in the loan
agreement. Loans must be repaid through electronic debiting from a bank account. The
participant receiving a loan shall be required to furnish the information and authorization necessary
to effectuate the foregoing payments prior to the commencement of a loan. The minimum loan
term over which a loan may be repaid is one (1) year. The maximum term over which a loan may
be repaid is five (5) years (fifteen (15) years if the Sponsor permits loans for the purchase of the
participant's principal residence) (See Section 17 below for more information about principal
residence loans).
In the event that a participant elects to receive a distribution from the Plan that is less than
100% of his outstanding account balance at a time when such person has a plan loan
outstanding, the participant may continue to make payments on the loan.
5. Loan Amortization. Each loan shall be amortized beginning approximately thirty (30) days
from the date the loan is processed in substantially equal payments consisting of principal and
interest during the term of the loan. Payments of principal and interest shall be made in a manner
and pursuant to the terms set forth in the loan agreement not less frequently than quarterly. The
amount of the final payment may be higher or lower.
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Resolution No. 2015-02
6. Loan Frequency. Each participant may have only one (1) Plan loan outstanding at any
given time from the Plan. A Plan loan which is in default, even if the defaulted loan was treated as
a "deemed distribution" under federal regulations, shall be treated as an outstanding loan until
the participant repays the total amount outstanding on the loan. NRS shall offset an active or
defaulted loan upon a participant's request for a full distribution of his or her account from the
Plan.
7. Rejected Payments. The participant must pay the full amount of each payment (principal
and interest) on the date that it is due. If NRS is unable to process an ACH debit payment on
the date due, NRS will assess a fee of $25.00 that will be deducted from the participant's
account(s) and will notify the participant of the rejected payment. If a payment is rejected
because of insufficient funds, NRS will attempt to process the payment a second time within five
(5) days of the rejected payment. If the second ACH debit processing fails, NRS will attempt
to process two (2) payments on the next payment due date. If this fails, one last attempt will
be made to process the payment within the next five (5) days. As an example, if a payment is
due January 1 and the ACH debit payment is rejected on that date, NRS will attempt to
process the payment again no later than January 6. If the January 6 attempt is rejected. NRS will
attempt to process two payments on February 1. If this fails, NRS will make a final attempt to
process the two payments no later than February 6.
8. Default. If a participant fails to make a loan payment when due, NRS will send written
notification of the failure to the participant and request that payment be made within one
calendar month of the payment due date. The entire amount of the loan will be defaulted and
treated as a deemed distribution effective as of one calendar month following the original due
date of the initial missed loan payment if both the missed payment and the next payment are
not paid by that date. A deemed distribution is treated as a distribution from the Plan for
federal (and possibly state or local) income tax purposes; therefore amounts treated as a deemed
distribution will be subject to federal, state and/or local income taxes, and certain excise
taxes and penalties may apply depending on the type of Plan. NRS will issue a Form 1099-R to
the participant no later than January 31 of the year following the year in which the deemed
distribution occurs reflecting the deemed distribution. Any payment made on a defaulted
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Resolution No. 2015-02
loan must pay off the outstanding balance of the loan in full including accrued interest.
Such payment following the date of default, will be treated as after tax amounts and the
participant will receive tax basis in his or her Plan account for such amounts.
The entire outstanding balance of the loan will also be due and payable upon notification to
NRS of the death of the participant and the outstanding balance of the loan will be treated as a
deemed distribution if the loan is not repaid in full within one calendar month following the date
of notification.
9. Loan Prepayment. The entire amount of a loan, including outstanding principal and any
accrued interest, may be paid without penalty prior to the end of the term of the loan in the
manner prescribed by NRS.
10. Loan Security. By accepting a loan, the participant is giving the Plan a security interest in his or
her vested Plan balance equal to the total loan amount, but not to exceed 50% of the
participant's vested Plan balance.
11. Minimum/Maximum Loan Amount. The minimum loan amount permitted is $1,000.002. Account
balances attributable to Section 3121 contributions and associated earnings will not be considered
in determining the maximum and minimum loan amount. The maximum amount of any loan
permitted under the Plan (when added to the outstanding balance of all other loans from the plan)
is the lesser of (i) $50,000, reduced by the excess (if any) of (A) the highest outstanding balance of
loans from the plan during the one-year period ending on the day before the date on which the
loan was made over (B) the outstanding balance of loans from the plan on the date on which the
loan is made, or (ii) one half of the present value of the Participant's vested account balance.
Any tax reporting required as a result of the receipt by a participant of a loan that exceeds the
limits imposed by federal regulations shall not be the responsibility of NRS, unless it is determined
that such limits were exceeded solely as a result of a loan made through NRS as service provider.
Consequently, NRS shall not be required to account for loans made pursuant to a plan other
than this Plan or loans made under this Plan that are made by another provider.
2 See footnote 1.
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12. Loans Offered under Multiple Vendor Arrangements/Multiple Plans. The Internal Revenue Code
requires that the maximum loan amount described in Section 11 above be applied in the
aggregate to all loans made under any plan sponsored by an employer.
The Sponsor and/or participant and not NRS shall at all times remain responsible for ensuring that
any loan received under the Plan is in accordance with such limits taking into account any other
loans received by the participant under any other plans of the participant's employer. NRS shall
apply the maximum loan amount limit and any other limits imposed under the Internal Revenue
Code without regard to any other loans received by the participant from any other investment
provider under this Plan or any other plan maintained by the Sponsor.
13. Suspension of Loan Payments. A participant's obligation to repay any loan under the Plan
may be suspended during the period in which the participant is performing service in the United
States military as may be required by law. The Participant must resume repayment of the loan upon
his or her completion of military service and the outstanding loan balance, including any
accrued interest and fees, must be repaid and may be re -amortized over a period that does not
exceed the latest permissible term for a loan under the regulations plus the period of the military
service. While the participant is on active duty in the United States military, the interest rate on the
loan shall not exceed six percent (6%), compounded annually unless the Participant elects in
writing during or after his or her military leave to have the loan higher interest rate, if applicable,
apply to the loan.
In addition, a participant's obligation to repay any loan under the Plan may be suspended during
the period (not to exceed one (1) year) while the participant is on an approved non-military
leave of absence provided that the leave is not less than six (6) months and the participant
provides requested documentation regarding the leave from his or her employer. The Participant
must resume repayment of the loan upon his or her return from leave and the outstanding loan
balance, including any accrued interest and fees, must be repaid and may be re -amortized over
a period that does not exceed the latest permissible term for a loan under the regulations.
The Sponsor assumes responsibility to notify NRS when a Participant begins and returns from a
leave described above as well as describe the type of leave.
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14. Loan Interest Rate. The interest rates for a Plan loan shall be commensurate with interest rates
being charged by entities in the business of lending money under similar circumstances. Generally,
the rate assumed will be Prime Rate + 2.00%+ other administrative and/or asset fees, as
applicable3. The Prime Rate shall be the prime rate published by the Wall Street Journal two
weeks prior to the end of the most recent calendar -year quarter and the new rate will be
effective on the first day of the new calendar quarter. The loan interest rate may be adjusted for
participants entering active duty in the military services as may be required by law.
15. Annual Loan Maintenance and Asset Fees. An annual loan maintenance fee of $50.004 will be
deducted from the participant's account until the loan is repaid in full or defaulted. The amount of
the outstanding loan balance will be subject to the maximum asset fee, administrative charge
or such other fees NRS is entitled to receive under its separate agreement with the Sponsor.
16. Loan Default Fee. At the time a loan is treated as a deemed distribution, a $50.005 fee will be
deducted from the participant's account and will apply annually thereafter, while the
defaulted loan remains unpaid.
17. Loans for the Purchase of a Principal Residence. All loans issued by the Plan will be general
loans to be repaid in no more than five (5) years unless the Sponsor affirmatively elects to offer loans
for the purchase of the participant's principal residence, which may be repaid in no more than
fifteen (15) years. Such loans shall be solely secured by the participant's vested account balance
as set forth in Section 10 above. All administrative procedures set forth herein shall apply to such
loans.
Will the Sponsor permit loans for the purchase of the Participant's principal residence? Indicate
below:
Yes X No ❑
3 See footnote 1.
4 See footnote 1.
5 See footnote 1.
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Resolution No. 2015-02
18. Loan Correction. In the event an error occurs in the administration of the loan, at the
Sponsor's direction, NRS may undertake correction of the error in accordance with methods
prescribed by the IRS or through any IRS correction program. The undersigned Sponsor hereby
adopts these Participant Loan Administrative Procedures effective for loans issued on or after the
effective date set forth below, and instructs NRS to administer loans made to Plan participants in
accordance with these terms.
19. Acceptance of Procedures. The Sponsor acknowledges the following: (i) that the Sponsor
has decided to offer loans under the Plan and is instructing NRS to administer loans under the
Plan; (ii) that it understands that, as a result of offering loans under the Plan, the Plan
participants could be subject to adverse tax consequences upon default of the loan; (in) that the
Sponsor has independently weighed these risks, and despite the risks has determined that
offering loans under the Plan is in the best interest of Plan participants; and (iv) NRS shall not be
liable for any adverse tax consequences described in (ii), except as specifically stated under
paragraph 11 herein, resulting from the Sponsor's decision to offer loans under the Plan.
Plan Sponsor Name ("Sponsor"):
Street Address:
City, State, Zip Code
Plan Name ("Plan"):
Plan Number:
Plan Sponsor Signature:
Title:
Date of Signature:
Email Address:
For new plan setup, an executed copy of these Procedures should be returned to Nationwide
Retirement Solutions at 10 W. Nationwide Blvd, 05-04-101 A, Columbus, Ohio 43215
(Attn: Plan Administrator)
For existing plans, an executed copy of these Procedures should be returned to Nationwide
Retirement Solutions at PO Box 182797, Columbus, Ohio 43218 (Attn: Loans Administrator)
NRN-0854AO 05/2014 7
Resolution NO. 2015-02
Nationwide Investment Advisors, LLC
ProAccount - Plan Sponsor Agreement
Formal Plan Name:
(the "Plan")
Name of Plan Sponsor: (the "Plan Sponsor")
The foregoing Plan currently utilizes services and products offered by Nationwide Retirement
Solutions, Inc. ("NRS") and its affiliated companies (the "Nationwide Retirement Program").
On behalf of the Plan, the Plan Sponsor desires to appoint Nationwide Investment Advisors,
LLC ("NIA"), an Ohio limited liability company, registered as an investment adviser with the
Securities and Exchange Commission under the Investment Adviser's Act of 1940 ("Advisers
Act") and an affiliate of NRS, as an authorized provider of investment advisory services to
participants in the Plan ("Plan Participants") who desire professional guidance in managing
their self -directed accounts within the Plan ("Accounts"). NIA's ProAccount program (the
"Advice Program") offers individualized investment advice using an investment process
developed and maintained by an independent financial expert ("IFE") selected and retained
by NIA.
WHEREAS, on behalf of the Plan, the Plan Sponsor hereby approves NIA as an authorized
provider of investment advisory services through the Advice Program to those Plan
Participants who choose to have their Accounts managed by NIA (collectively, the "Plan's
Account");
WHEREAS, the Plan Sponsor hereby authorizes each such Plan Participant's self -direction of
their own Account, subject to guidelines imposed by the Plan, and authorizes each Plan
Participant to enter into an investment advisory agreement directly with NIA for the
management of their account;
WHEREAS, the Plan Sponsor acknowledges that such advisory services are permitted under
the documents establishing the Plan ("Plan Documents") and that the investments and
investment strategies proposed by NIA through the Advice Program are consistent with the
Investment Policy of the Plan; and
WHEREAS, Plan Sponsor acknowledges that NIA and NRS are affiliates and that NRS will
provide to NIA certain administrative services in support of the Advice Program;
NOW, THEREFORE, in consideration of the foregoing and the promises, covenants and
mutual agreements set forth herein, the adequacy of which is hereby mutually acknowledged,
NIA and the Plan Sponsor, each intending to be legally bound, hereby do agree as follows:
APPOINTMENT OF INVESTMENT ADVISOR
The Plan Sponsor hereby appoints NIA to exercise discretionary authority to allocate and
reallocate Plan Participant Accounts in the manner described in Section II below and NIA
hereby accepts this appointment, subject to the terms and conditions of this Agreement.
NIA's authority under this Agreement will remain in effect until changed or terminated
pursuant to the termination provisions described in this Agreement. NIA's authority under
this Agreement shall apply to all defined contribution plans sponsored by the Plan Sponsor
that are record kept at Nationwide or any of it's affiliates on a single Nationwide record
keeping system. To the extent that the Plan Sponsor desires to exclude a defined
contribution plan from coverage under this Agreement subsequent to coverage of such plan,
the Plan Sponsor must notify NIA of such individual plan's termination of services under this
Agreement in accordance with Section IX of this Agreement.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
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Resolution No. 2015-02
ADVICE PROGRAM DESCRIPTION
The Advice Program is a discretionary managed account service offered by NIA for
retirement plan participants who desire professional guidance in managing their self -directed
retirement plan account. The Advice Program offers individualized investment advice using
an investment process developed and maintained by an IFE.
Under the Advice Program, the IFE develops and maintains managed account portfolios
("Portfolios") based on all eligible investment options available under the Plan's menu of
investments ("Advice Program Investments"). In addition, the Plan may offer investment
options other than Advice Program Investments, including, but not limited to, individual
stocks, employer stock, guaranteed certificate funds, and collective investment funds
(collectively, "Non -Advice Program Investments"), which will not be considered by the IFE in
the development of Portfolios.
In order for Plan Accounts to be eligible for management under the Advice Program, they
must be invested in mutual funds or variable insurance sub -accounts at the time the Plan
Participant enrolls in the Advice Program. Plan Sponsor hereby acknowledges that any
employer -directed assets, restricted assets (including assets invested in the Nationwide Fixed
Contract), or assets held in self -directed brokerage accounts are not eligible for the Advice
Program and will remain invested in their current manner until further action is taken by the
Plan Participant or the Plan.
The IFE is not a party to this Agreement, and there is no contractual relationship between the
Plan and the IFE. All fees and expenses charged by the IFE for its services will be paid by
NIA. The advice provided to Plan Participants under the Advice Program is limited to the
independent advice provided based on the Portfolios created by the IFE, which NIA cannot
modify. By signing this Agreement, you agree that NIA has discretion to terminate its
relationship with the IFE at any time, without notice to you, and engage the services of a
suitable replacement.
By allowing the Advice Program to be offered to the Plan, you are naming NIA as an
authorized provider of investment advisory services to those Plan Participants who choose to
have their accounts managed by NIA.
III. OBLIGATIONS AND REPRESENTATIONS OF THE PLAN SPONSOR
The Plan Sponsor agrees to notify NIA of any change to the Plan Documents that affects
NIA's rights or duties to the Plan or Plan Participants, and acknowledges that such change will
bind NIA, as the case may be, only when NIA agrees to it in writing.
The Plan Sponsor represents that (1) NIA's investment advisory services are permitted under
the Plan Documents; (2) the Plan Sponsor has the authority to enter into this Agreement on
behalf of the Plan; and (3) the Plan is operated, and NIA's appointment is, in compliance with
all applicable federal and state laws, rules and regulations.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
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Resolution NO. 2015-02
IV. OBLIGATIONS AND REPRESENTATIONS OF NIA
NIA agrees that in performing any of its duties and obligations hereunder, NIA will act in
conformity with all terms and provisions of the agreements entered into between NIA and the
Plan Participants and any instructions given pursuant thereto or otherwise, and will conform
to and comply with the requirements of the Advisers Act and all other applicable federal and
state laws, rules and regulations, as each may be amended from time to time.
NIA represents that it is registered as an investment adviser under the Advisers Act or under
applicable state law in each state in which it is providing investment advisory services or is
otherwise required to be registered and/or notice filed, and each of its representatives are
properly registered, licensed and/or qualified to act as such under all applicable federal and
state securities statutes and regulations.
NIA does not have any duty, responsibility or liability for Plan assets that are not part of the
Plan's Account that NIA manages through the Advice Program. NIA will not be providing
investment advice regarding, or have fiduciary responsibility for, the selection and monitoring
of investment options available in the Plan.
NIA shall have no obligation or authority to take any action or render any advice with respect
to the voting of proxies solicited by or with respect to issuers of securities held in the Advice
Program.
V. ADVICE PROGRAM FEES
In consideration of services rendered to Plan Participants, the Plan Sponsor hereby approves,
subject to specific approval by each Plan Participant electing to have their Accounts
managed by NIA, a participant level Advice Progam fee ("Advice Program Fee") as outlined
in the following schedule:
Account Balance
Annual Program Fee
The first $99,999.99
1.00%
The next $150,000
0.90%
The next $150,000
0.75%
The next $100,000
0.60%
Assets of $500,000 and above
0.50%
To the extent the ProAccount Fee applies to multiple plans of the Plan Sponsor, the
ProAccount Fee shall be based on the combined balances within the ProAccount but will be
withdrawn on a pro rata basis among the Participant's accounts in the separate plans.
The Advice Program Fee is separate from the fees and expenses charged by investment
options offered through the Plan and in addition to any trustee, custodial, asset, service,
administrative or transactional fees that the Plan Participants or the Plan may incur through
the Nationwide Retirement Program. The Advice Program Fee shall be calculated daily based
on the Participant's daily balance and the calculated Advice Program Fee withdrawn
quarterly in accordance with each Plan Participant's investment advisory agreement with NIA.
The Plan Sponsor hereby consents to the withdrawal of the Advice Program Fee from the
applicable Plan Participant Accounts and agrees that it will use its best efforts to facilitate
payment of such Advice Program Fee. If this Agreement ends before the end of the
applicable calendar quarter, then a pro-rata share of the Advice Program Fee will be
withdrawn from the Plan's Account.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
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Resolution NO. 2015-02
To the extent permitted by applicable law or regulation, affiliates of NIA may receive
payments from, or in connection with, investment options selected by the IFE which are
included in the Portfolios. In addition, the IFE may select certain investment options for
which NIA or an investment advisory affiliate acts as investment adviser. The IFE's fees for
services provided under the Advice Program are not related to the investment options the
IFE selects for the Portfolios or otherwise influenced by the payments NIA or its affiliates may
receive from such investment options.
Certain Advice Program Investments may charge a redemption fee or impose a trade
restriction on certain transactions. Redemption fees vary in amount and application from
investment option to investment option. It is possible that transactions initiated by NIA under
the Advice Program may result in the imposition of redemption fees or trade restrictions on
one or more investment options held in Plan Participant Accounts. Any redemption fees will
be deducted from the Plan Participant's Advice Program Account balance. For further
information on redemption fees or trade restrictions, including whether they will be
applicable to any of the investment options within your Plan, please consult the individual
fund prospectus or other investment option disclosure material.
VI. INDEMNIFICATION, LIMITATION OF LIABILITY, AND RISK ACKNOWLEDGMENT
Each party agrees to hold harmless, defend and indemnify the other party (including its
directors, officers, employees, affiliates and agents) from and against any and all claims,
liabilities, losses, costs, damages or expenses (including, without limitation, cost of litigation
and reasonable attorneys' fees) (collectively, "Losses") arising out of or attributable to the
indemnifying party's (i) willful misconduct, bad faith, criminal activity, or gross negligence, (ii)
material breach of this Agreement or the material inaccuracy of any representation or
warranty provided hereunder, or (iii) violation of any law to which such party is subject.
Plan Sponsor, on behalf of the Plan, agrees to hold harmless, defend and indemnify NIA
(including its directors, officers, employees, affiliates and agents) from and against any and all
Losses arising out of or attributable to NIA's following directions or carrying out instructions,
or using obsolete, inaccurate or incomplete information, given or furnished by the Plan or its
agents.
A party that seeks indemnification under this Section VI must promptly give the indemnifying
party written notice of any legal action. But a delay in notice does not relieve an
indemnifying party of any liability to an indemnified party, except to the extent the
indemnifying party shows that the delay prejudiced the defense of the action. The
indemnifying party may participate in the defense at any time or it may assume the defense
by giving notice to the other party. After assuming the defense, the indemnifying party:
must select an attorney that is satisfactory to the other party; is not liable to the other party
for any later attorney's fees or for any other later expenses that the other party incurs, except
for reasonable investigation costs; must not compromise or settle the action without the
other party's consent (but the other party must not unreasonably withhold its consent); and is
not liable for any compromise or settlement made without its consent. If the indemnifying
party fails to participate in or assume the defense within 15 days after receiving notice of the
action, the indemnifying party is bound by any determination made in the action or by any
compromise or settlement made by the other party
Federal and state securities laws impose liabilities in certain circumstances on persons who
act in good faith, and nothing in this Agreement waives or limits any rights either party has
under those laws.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
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Resolution No. 2015-02
Risk Acknowledgment
NIA uses reasonable care, consistent with industry practice, in providing advisory services
through the Advice Program. Investments within the Plan, as all investments in securities,
involve risk and will not always be profitable. Investment return and principal will fluctuate
with market conditions, and Plan Participant Accounts may lose money. Past performance of
investments is no guarantee of future results. The analysis and advice provided by the IFE
and delivered by NIA depends upon a number of factors, including the information you or the
Plan Participants may provide, various assumptions and estimates, and other considerations.
As a result, the advice developed and the recommendations provided are not guarantees that
Plan Participants will achieve their retirement goals or anticipated performance. The
investment advice provided under this Agreement relates only to the Plan Participant
Accounts and will not apply to any other assets a Plan Participant may own.
VII. CONFIDENTIALITY
Each party agrees that it will not, without the prior written consent of the other party, at any
time during the term of this Agreement or any time thereafter, except as may be required by
competent legal authority or as necessary to facilitate the implementation of services
hereunder, use or disclose to any person, firm or other legal entity, including any affiliate or
other representative of the party, any confidential records, secrets or information related to
the other party (collectively, "Confidential Information"). Confidential Information shall
include, without limitation, information about the other party's products and services,
customer lists, customer or client information, Plan and Plan Participant information, and all
other proprietary information used by the party in its business. The parties acknowledge and
agree that all Confidential Information that it has acquired, or may acquire, was received, or
will be received in confidence. Each party will exercise utmost diligence to protect and guard
such Confidential Information.
The Plan Sponsor (1) acknowledges that it is authorized to provide Confidential Information,
including but not limited to Plan Participant information, to NIA for the operation of the
Advice Program, and the provision of such information does not violate any Plan or company
provisions or policies; and (2) authorizes the sharing of Plan Participant information among
NIA and its affiliates as necessary for the operation of the Advice Program.
VIII. TERM OF AGREEMENT
This Agreement shall become effective upon acceptance by NIA, or its designated agent,
upon review and receipt in its principal place of business, and such acceptance may be
evidenced by internal records maintained by NIA or its designated agent. This Agreement
shall continue until terminated by either party upon at least 30 days' advance written notice
to the other. This Agreement will terminate immediately if the Plan terminates its
participation in the Nationwide Retirement Program. In the event NIA terminates its
relationship with the current IFE and has not designated a successor IFE, this Agreement shall
automatically terminate upon written notice from NIA. The Plan Sponsor understands that
upon termination of this Agreement, the Plan's Account will remain invested in the Advice
Program Investments last allocated by NIA until such time as Plan Participants make changes
to their individual Accounts.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
NRM-7982AO.6-0714 5 of 7
Resolution No. 2015-02
IX. MISCELLANEOUS
Notices
All notices required to be delivered under this Agreement will be delivered in person or by
U.S. first class mail, overnight courier, or facsimile (with a paper copy provided via the U.S.
mail), in each case prepaid, to NIA at the address provided below and to the Plan Sponsor at
the address provided on the signature page of this Agreement (or to such other addresses as
the parties may specify to one another in writing):
Nationwide Investment Advisors, LLC
Attention: Nationwide ProAccount
P.O. Box 183192, Mail Stop: 5-02-201
Columbus, Ohio 43218-3192
Phone: 888/540-2896
Fax: 855/435-1863
Notices will be deemed given upon dispatch.
Form ADV
The Plan Sponsor acknowledges having received and read NIA's Form ADV, Part 2 ("Form
ADV") and Privacy Policy upon entering into this Agreement. The Form ADV is a disclosure
document that summarizes the investment advisory services provided by an investment
adviser registered with the SEC and/or the states. The Form ADV contains additional
information about the Advice Program.
Entire Agreement; Amendment
This Agreement constitutes the entire agreement between the parties hereto with respect to
the obligations arising hereunder and supersedes and cancels any prior agreements,
representations, warranties or communications, whether oral or written, among the parties
hereto relating to the subject matter hereof. This Agreement may be amended by NIA upon
30 days' prior written notice to the Plan Sponsor and may be amended immediately upon
notice to the extent required to satisfy federal or state regulatory requirements.
Headings
All Section headings in this Agreement are for convenience of reference only and do not form
part of this Agreement. Section headings will not, in any way, affect the meaning or
interpretation of this Agreement.
Waiver
No delay by either party in requiring performance by the other shall affect the right of such
party to require performance; no waiver by either party of any breach shall be construed as a
waiver of any subsequent breach or as a waiver of the provision itself or any other provision.
Survival
All terms and provisions of this Agreement, including without limitation: "Indemnification,
Limitation of Liability, and Risk Acknowledgment," "Confidentiality," and Miscellaneous" which
should by their nature survive the termination of this Agreement, shall so survive the
termination of this Agreement.
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
NRM-7982AO.6-0714 6 of 7
Resolution No. 2015-02
Assignment
Neither party may assign this Agreement (within the meaning of the Advisers Act) or assign
any of the rights or delegate any of the duties or obligations of this Agreement without the
other party's prior consent. Any assignment in violation of this provision shall be void and of
no force or effect.
Force Majeure
Neither party shall be liable for failure to perform if the failure results from a cause beyond its
control, including, without limitation, fire, electrical, mechanical, or equipment breakdowns,
delays by third party providers and/or communications carriers, civil disturbances or
disorders, terrorist acts, strikes, acts of government authority or new governmental
restrictions, or acts of God.
Severability
Should any provision of this Agreement be held invalid or unenforceable by any court,
arbitrator, statute, rule or otherwise, the remaining provisions of this Agreement will not be
affected thereby and will continue in full force and effect to the fullest extent practicable.
Governing Law
This Agreement and its enforcement will be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflicts of law provisions or principles.
Nothing herein will be construed in any manner inconsistent with the Advisers Act or any rule
or order of the Securities and Exchange Commission, as applicable.
IN WITNESS WHEREOF, the Plan Sponsor, on behalf of the Plan, has executed this
Agreement as of the date set forth below.
Plan:
By: (Signature)
Name: (Printed)
Plan Address:
Plan Contact/Telephone:
Date:
ACCEPTED BY NIA:
Nationwide Investment Advisors, LLC
By:
Print Name:
Title:
Date:
Title:
Nationwide Retirement Solutions 10 W. Nationwide Blvd. Columbus, Ohio 43215
NRM-7982AO.6-0714 7 of 7
Some people prefer to put their retirement plan accounts in the hands of professionals. That's why we
created Nationwide ProAccount" Help take some of the guesswork out of your participants' retirement
plan account investment decisions with a managed account program designed specifically for retirement
plans like yours. The great news is, you can offer this option at no additional cost to your plan.'
Who is Nationwide ProAccount for?
Nationwide ProAccount was designed for
retirement plan participants who prefer
the convenience of having their accounts
managed by professionals or who simply do
not feel they have the time or expertise to do
it themselves. Unlike some managed account
programs, there's no minimurn account value
requirement for Nationwide ProAccount.
Who manages the program?
Nationwide Investment Advisors, LLC (NIA)
is the investment adviser for Nationwide
ProAccount and employs Wilshire
Associates Incorporated (Wilshire) as
the Independent Financial Expert for the
program. Wilshire is an experienced firm
in the field of asset allocation, investment
manager selection, and risk management
How does it work?
Participating employees complete a Risk
Tolerance Questionnaire that helps identify their
retirement objectives and risk tolerance. Using
t'rhis information, and the employee's age, Wilshire
selects an investment portfolio, and NIA allocates
and rebalances the participant's retirement plan
account according to that portfolio. Then, as
the participant's time horizon or risk tolerance
changes, the account is adjusted periodically
to help keep it on track to meet the
participant's retirement goals.
How is it different?
Nationwide ProAccount is different from an
asset allocation fund or life cycle fund in that
the participant receives individualized advice
through managing the assets in their retirement
plan account.' Nationwide ProAccount is an
advisory service developed specifically for
retirement plan participants like yours.
Nationwide®
Financial
Altho'ugn th-ore's ro cost. Co you as the p`an sponsor, particpants'>A:ho e'iroli in Natiori,,'aide
ProAccount are assessed an arm,,;al eves. meat nar�)ger ':ent fee (ProAccount Pee).
Nationwlde ProAccouni portfolios are made up o** ^c iv dual funds. ProAcCOI:n participants pay ar investment
management fee n aud!t!on to the fees relat^d to tcc underlying funds v✓ith:r the participant's account.
PC P,) •� r' -� ... /if I-.-_ '�f-`.:L:.N 1.1 �: •',��1i1 �:.._: ^y 1 \�N�
,.,r I ! ,`.-.
Where is the money invested?
Nationwide ProAccount utilizes the funds from
your current fund menu lineup and creates
an investment mix designed specifically to
each participant's needs, based on his or her
retirement time horizon and risk Profile.
What does it cost participants?
Some investment management services
require a minimum account balance and
charge a healthy fee. But Nationwide
ProAccount makes professional investment
management accessible and cost-effective for
all your employees. Participants are charged
an annual investment management fee for
Nationwide ProAccount. I he maximum
ProAccount Fee is 1%, calculated daily based
on the market value of program assets, and
paid quarterly in arrears. Fees are deducted
automatically from participant accounts and
appear on their quarterly Fee Notification.
Nationwide®
Financial
What about fiduciary responsibility?
As a plan sponsor and fiduciary, you are
responsible for reviewing investment options
and services to determine whether they're
appropriate for your plan. As a fiduciary,
vou've also accepted the responsibility to
always try to make good decisions on your
participants' behalf. We're committed to
assisting you in your review of Nationwide
ProAccount and will provide information
to help you make an informed decision.
Enclosed you'll find a detailed description
of Nationwide ProAccount, along with a
copy of NIA Form ADV Part 2 brochure.
Where can I get more information?
Please review the enclosed Nationwide
ProAccount materials. If you have questions
or would like to learn more about ProAccOUnt,
call 1-877-677-3678, option 6 or contact your
local Nationwide representative today.
- Not a deposit - Not FDIC or NCUSIF insured - Not guaranteed by the institution
- Not insured by any federal government agency - May lose value
Investment advice `or Nat,orwde ProAccount is prov'ded to plan participants by
Nationv";de Investment Advisors. LLC (NIA.), an SEC-registerea investment adviser. NIA
has hired VVtlshire Associa':es hcorporated ("wi4 rtiire" ) as t,)e ln.dependen*c Financial
Expert "o Nat onwide Pr(DAcCoun: Wi sh re Associates Inc. Is ,ot ar":Ila:er with NIA.
`>/'dilsire Funds Nlariaraemr�n sines I rp �,
t, a �;. c_5 U1`.I' Of �•P✓; Shi f�S50CiaJ S Inc., uses r"atl"1t'"n,atlCa a^U
Stat '.it.;cal investment,,)recesses to a0ocat e assets, select in'ves rnent options and COHStruCt pOr .`o.IOS
;n "ray'S t;'at S'E'k to OUtocr'orm thelr SneCific perch -narks. Stich r)roCi'sses may rot ach1eve the
desired results. Asset NIIOGatlon sel f e1" qu arantee..s a 'etum nor el minates nsk In a porCfOliO.
...C)la r3r.,.r.. ,:Inc. I i cni °, rJt1U< n r b R.vd.
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c , N; t : t t_(,• I u`:.-)I Inyur.irc,n :,.> IF ,! I-v �.7 '11i1