Statement of Work Exhibit A.docx

Statement of Work For

SBCTC 2026-RFP-001

The State Board Retirement Plan (SBRP) was initially offered in 1970 to faculty and employees exempt from the civil service system. Numerous amendments have been adopted over the plan’s 55-year history, to address changing system needs and changes in state and federal regulations. Effective January 1, 1998, the State Board changed the SBRP from a 403(b) plan to a 403(a) plan, allowing participants to voluntarily defer more income for retirement. Under IRS regulations, this required closing the existing plan to new contributions and setting up a new plan with new accounts for existing participants. Since 2006 the SBRP has been a 401(a) qualified defined contribution retirement plan.[footnoteRef:1] “Qualified” means that the IRS has reviewed the plan terms in advance and determined that contributions and earnings are tax deferred. “Defined” means that the contribution amounts are fixed, with the benefits dependent upon accumulations at the time of retirement. The State Board requested and received Favorable Determination letters from the IRS in 1998, 2011 and 2017.[footnoteRef:2] [1: Changing to a 401(a) plan allowed for mutual fund investment options to be included in the plan.] [2: A Favorable Determination letter means that the IRS has reviewed the plan terms and determined that the plan complies with the Internal Revenue Codes. Receiving a Favorable Determination letter provides confidence that plan contributions are tax deferred.]

The SBRP is governed through a Plan Document, last reviewed and adopted by the State Board in October 2015. The Plan Document is the primary governing instrument of our plan and addresses a mix of IRS regulation, state law and State Board policies. Plan changes have not been made since that time. Mandatory provisions of SECURE Act necessitate certain plan updates. The following information briefly summarizes several of the primary policy components set by the State Board:

· Eligibility is limited to system[footnoteRef:3] faculty and exempt administrative and professional employees assigned to work at least half-time for two consecutive quarters or six months. Employees meeting the eligibility criteria may choose to participate in the SBRP or become a member of Public Employee or Teachers retirement systems. Once SBRP eligibility is established, it is maintained as long as the participant is continuously employed with an eligible employer. [3: As an additional tool to recruit prospective employees from higher education, the Legislature authorized the Higher Education Coordinating Board (HECB) to offer a retirement savings plan in 2010. Rather than sponsor its own plan, the HECB requested the State Board to extend its plan to their eligible employees. The State Board agreed to the request and extended the SBRP to the HECB in 2011. This arrangement continues for the Washington Student Achievement Council.]

· Participant contributions are fixed and based upon age: 5 percent of salary through age 34; 7.5 percent of salary for participants’ age 35 through 49; and 10 percent of salary for those age 50 and older. These amounts are matched, dollar-for-dollar, by the employer. As allowed by IRS regulations, participants can roll over retirement savings from other employer plans into the SBRP.

· There are 29 investment options available to participants that address a variety of market sectors and investment styles. Allocation of contributions and accumulations to the investment options are self-directed by each participant. Participants who fail to make a choice are defaulted into a target-date fund closest to their projected retirement date.

· Distribution of Plan accumulations may occur at retirement, 90-days after separation, for limited hardship reasons or through participation in the “phased retirement program.” Through mutual agreement, the phased retirement program allows participants to continue working in a reduced capacity and receive “in-service distributions” from their retirement plan savings.

The State Board Supplemental Benefit Plan is a unique component of Washington State’s public higher education retirement plans, including the SBRP. In providing this feature, the Legislature established a “safety net” for eligible higher education retirement plan participants that, through a calculation, ensures participants receive at least a minimal benefit for their state service. For most participants, their retirement plan benefit exceeds the minimum threshold established by the Legislature.

Through 2015, supplemental benefits were provided through provisions within the SBRP Plan Document. Based upon IRS guidance, the supplemental benefit provisions were moved into separate plans, effective January 1, 2016. The plan was reviewed by the IRS and received a Favorable Determination Letter in June 2017.

The Supplemental Benefit Plan is a defined benefit plan, meaning that the benefit amount, if any, is determined by formula and not by account accumulations. Initiated at retirement, the calculation:

· Includes years of service and highest average salary to establish a “retirement income goal;” and,

· Relies upon data and TIAA actuaries to set an “assumed retirement income.”

In general, the State Board pays the positive difference between a participant’s retirement income goal and his or her assumed retirement income. Participants do not make contributions to this plan.

The benefits paid to eligible retirees are paid from the system operating budget. Due to the growing fiscal liability for all the higher education retirement plans, the 2011 Legislature closed these “supplemental” plans to participants hired after June 30, 2011 and required institutions to begin pre-funding the benefits through contributing .5 percent of salary into a supplemental benefit fund. Until a sufficient reserve is built, the higher education plan sponsors, including the State Board, continue to pay these benefits from operating funds.

The State Board – Voluntary Investment Program (SBVIP) is a 403(b) public employer sponsored retirement savings program governed by a Plan Document adopted by the Board in October 2007. The plan is funded primarily through employee pre-tax contributions (An after-tax Roth feature was added in 2008). Participation is allowed by all regularly scheduled system employees. Participants of the SBVIP have access to the same 29 investment options available to SBRP participants. The SBVIP has approximately 5,000 participants and just under $700 million in assets.

Administration. The Director of Human Resources has been identified as the Plan Administrator for each of the plans sponsored by the State Board. The Plan Administrator is responsible for the day-to-day operation of each plan. This includes the authority to interpret and apply the provisions of the plans, contract with advisors, make technical corrections to Plan Documents and be the final arbiter of any disputes.

Local administration has been delegated to each employer participating in the plans (the 30 college districts, the State Board and WASAC). Both the Plan Administrator and the record keeper provide training opportunities and have developed documents to support local administration. Documents have also been developed and provided that explain plan features to participants. Participants receive quarterly statements from the record keeper and may access account information on-line at any time. The record keeper also provides investment advice and retirement planning information through the phone, on-line or in-person group or individual counseling sessions.

Investment Fund Updates. Providing a diversified, low-cost array of investment options is considered the best strategy for providing employees at all risk tolerance levels the ability to invest long-term and generate lifetime income. The investment menu was updated in 2024 and is applicable to SBRP and SBVIP participants. With assistance from the record keeper, an investment advisor, and an investment review committee, participation rates and performance for each investment option in the plan menu is typically reviewed twice each year. The last major change to the menu was made in July 2024 after consultation with the above. There were approximately 38 fund choices at the time of review. The average plan of this size has 29 fund choices. Part of the consideration during the investment review process was to streamline options, simplify choices, and eliminate some of the administrative costs. Fund choices were cross walked into like options. Participants had the option to automatically have fund choices crosswalk into the new option choices or make individualized changes. A series of seminars were held by TIAA and consultants from TIAA were also available to meet individually with participants.

3. Objectives of the Engagement The organization seeks a consultant to:

· Assist with keeping abreast of regulatory changes, increased complexities of plan administration to remain in compliance

· Investment selection and monitoring

· Fiduciary reporting and compliance

· Regulatory assistance

· Benchmarking based on research

· Ad hoc requests

· Investment consultation on proprietary and non-proprietary investment products.

· Improve participant outcomes and retirement readiness.

· Assist in regulatory and compliance matters.

4. Scope of Work The selected consultant will provide services including, but not limited to, the following:

A. Fiduciary Governance Support

· Experience implementing compliant retirement plan fund offerings

· Attend Retirement Plan/Investment Review Committee meetings.

· Prepare meeting materials and reports.

· Assist with fiduciary best practices.

· Maintain committee governance processes.

· Assist with fiduciary education and training.

Deliverables

· Quarterly committee reports

· Fiduciary training materials

· Governance recommendations

B. Investment Advisory Services Investment Monitoring

· Annual report of fund performance

· Fund performance monitoring

· Analysis of funds and expenses

· Full disclosure of fees

· Comparison to industry benchmarks

· Education support Investment Recommendations

· Recommend additions, removals, and replacements.

· Perform due diligence on investment options.

Deliverables

· Quarterly investment reviews

· Watch list recommendations

· Annual investment strategy review C. Regulatory and Compliance Support Assist with:

· ERISA fiduciary practices

· Department of Labor developments

· IRS retirement plan regulations

· Plan governance documentation Deliverables

· Regulatory updates

· Compliance guidance

· Fiduciary risk assessments