(1) The Board has the exclusive authority to manage the assets of the deferred compensation plan. All powers and duties required for the management of the plan trust fund are vested in the Board of Investment Trustees.
(2) Sections
33-61A (Indemnification of trustees),
33-61C (Standard of care), and
33-61D (Ethics and conflict of interest) apply to the Board’s responsibilities under the deferred compensation plan.
(3)
Chapter 11B does not apply to the procurement of goods and services for the deferred compensation plan by the Board.
(b) Duties. The Board must:
(1) develop record keeping procedures to maintain and report on participant account balances;
(2) designate appropriate investment options to be offered to participants;
(3) designate a method of accounting for investments;
(4) designate methods of making distributions of participant account balances;
(5) make distributions to participants, former participants, or their designated beneficiaries after the Chief Administrative Officer authorizes the benefits; and
(6) incur and pay expenses to carry out the Board's responsibilities under the plan.
(c) Agents for transfer of property.
(1) The Board may register any assets in its own name or in the name of a nominee. The Board may hold any assets in bearer form. The Board or its agent must keep records that show that the investments are part of the trust fund.
(2) The Board may form a partnership under State law to hold or transfer assets as the nominee of the Board.
(3) The Board may designate in writing a trustee or trustees to hold or transfer assets as a nominee of the Board.
(4) The Board must provide that trustees or a partnership that the Board designates must act only as agents of the Board. The Board may set other conditions that the Board considers prudent.
(5) The trustees or a partnership that the Board designates may retain the services of a bank or other financial institution to conduct required business.
(d) Authorized investments.
(1) The Board must invest each participant's account in one or more of the Board-designated investment options in the manner directed by the participant.
(2) The Board may select or remove any investment options for the deferred compensation plan that the Board finds prudent under the policies set by the Board.
(3) If an investment through any combined, common, or commingled trust fund exists, the declaration of trust of that fund is a part of the deferred compensation plan trust.
(e) Trustee powers. Except as otherwise provided in this Article, the Board may:
(1) with any cash, purchase or subscribe for any investment, at a premium or discount, and retain the investment;
(2) sell, exchange, convey, transfer, lease for any period, pledge, mortgage, grant options, contract with respect to, or otherwise encumber or dispose, at public or private sale, for cash or credit or both, any part of the deferred compensation plan;
(3) subject to Section
33-61A(h)(2), sue, defend, compromise, arbitrate, compound and settle any debt, obligation, claim, suit, or legal proceeding involving the deferred compensation plan, and reduce the rate of interest on, extent or otherwise modify, foreclose upon default or otherwise enforce any debt, obligation, or claim;
(4) retain uninvested a part of the deferred compensation plan trust assets in preparation for initial investment of deferred compensation amounts or for the payment of distributions;
(5) exercise any option on any investment for conversion into another investment, exercise any rights to subscribe for additional investments, and make all necessary payments;
(6) join in, consent to, dissent from, oppose, or deposit in connection with the reorganization, recapitalization, consolidation, sale, merger, foreclosure, or readjustment of the finances of any corporation or property in which the assets of the deferred compensation plan are invested, or the sale, mortgage, pledge or lease of that property or the property of any such corporation upon such terms and conditions that the Board considers prudent; exercise any options, make any agreements or subscriptions, pay any expenses, assessments, or subscriptions, and take any other action in connection with these transactions that the Board considers prudent; and accept and hold any investment that may be issued in or as a result of any such proceeding;
(7) vote, in person or by any proxy, at any election of any corporation in whose stock the assets of the deferred compensation plan are invested, and exercise, personally or by any power of attorney, any right appurtenant to any investment held in the deferred compensation plan; and give general or specific proxies or powers of attorney with or without power of substitution;
(8) sell at a public or private sale, enter into an option to sell, mortgage, lease, partition, or exchange any real property at prices and for terms that the Board considers prudent. The Board may execute and deliver deeds of conveyance and all assignments, transfers, and other legal instruments for passing the ownership to the purchaser, free and discharge of all liens;
(9) renew or extend any mortgage, upon such terms that the Board considers prudent, and increase or reduce the rate of interest on any mortgage or modify the terms of any mortgage or of any guarantee as the Board considers prudent to protect the deferred compensation plan or preserve the value of the investment; waive any default or enforce any default in a manner that the Board considers prudent; exercise and enforce any right of foreclosure, bid on property in foreclosure, take a deed in lieu of foreclosure with or without paying a consideration, and release the obligation on the bond secured by the mortgage; and exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect to any mortgages or guarantee;
(10) incur and pay expenses for agents, financial advisors, actuaries, accountants and counsel, if those expenses are incurred solely to perform the Board's duties under the deferred compensation plan;
(11) borrow, raise or lend moneys, for the purpose of the deferred compensation plan, in such amounts and upon such terms and conditions as the Board in its discretion considers prudent; for any money borrowed, issue a promissory note and secure the repayment of this note by pledging or mortgaging all or any part of the deferred compensation plan;
(12) hold, buy, transfer, surrender, and exercise all other incidents of ownership of any annuity contract;
(13) if payments to a participant or beneficiary are to be made in the form of an annuity based on one or more lives or life expectancies, buy from any legal reserve life insurance company a single premium, nontransferable annuity contract providing for the payment of the benefits;
(14) pool all or any of the assets of the deferred compensation plan trust with assets belonging to any other retirement plan trust or retiree health benefit trust created by the County. The Board may commingle the assets and make joint or common investments and carry joint accounts on behalf of the deferred compensation plan trust and one or more other trusts, allocating undivided shares or interests in the investments or accounts, or in any pooled assets, to the trusts according to the trusts’ respective interests. Consistent with its investment authority in this Article, the Board also may buy or sell any assets or undivided interests in any trust where the assets of the deferred compensation plan trust are pooled at the prices or valuations that the Board determines; and
(15) do all acts that the Board considers necessary and exercise the powers of this Article to manage the deferred compensation plan trust. The Board may exercise all powers to manage the assets that an individual could exercise to manage property owned by the individual, except for making an individual investment selection.
(f)
Prohibited transactions. The Board must not engage in any direct or indirect transaction between the trust and the County, or any entity controlled by the County, that would violate the prudent person rule (Section 33-61C) or result in the diversion of trust income or corpus in violation of the exclusive benefit rule (Section 33-144(d)). (g) The Board must monitor the performance of each investment option. Monitoring may include any tests or analyses that the Board finds prudent.
(h) Payments. The Board must pay all benefits and expenses of the deferred compensation plan as directed by the Chief Administrative Officer. The Board may pay expenses incurred under paragraph (e)(10) without direction by the CAO.
(i) Benefit recipients. The Board may rely on the decision of the Chief Administrative Officer to identify the proper recipient of benefit payments.
(j) Delegation of duties. The Board may delegate its duties to the Executive Director or a similarly situated County employee as it deems appropriate and consistent with its fiduciary duties in a written policy and procedure. If the Board has prudently delegated its duties and monitored the delegation, the trustees must not be liable for an act or omission made by its delegate. (1995 L.M.C., ch. 8, § 1; 1998 L.M.C., ch. 23, § 1; , § 1; , § 1; , § 1; , §1.)
Editor’s note—See County Attorney Opinion dated discussing the parameters within which the Board of Investment Trustees may disclose certain employee data to companies providing deferred compensation plans.
Section 2 of 1998 L.M.C., ch. 23, reads as follows: "The powers and duties of the Board of Investment Trustees regarding the Deferred Compensation Plan of Montgomery County trust take effect when all trustees accept the trust agreement in writing."
