9 NYCRR Part 9003 - Executive Department

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Source version current through May 15, 2022

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9 NYCRR 9003.1 - Contracts or agreements

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

(a)The contracts or agreements effecting the appointment of any trustee, independent consultant, administrative service agency, financial organization or firm of certified public accountants to provide services in respect of a plan shall be awarded pursuant to the procedures set forth in this Part and shall comply with the requirements of this Subtitle. Contracts or agreements with administrative service agencies shall not be required in whole or in part if an appointed trustee or financial organization, in the opinion of the board or of the deferred compensation committee, as applicable, is able to perform all or a portion of the required services as effectively. Contracts or agreements with independent consultants shall not be required in whole or in part if, in the opinion of the board or of the deferred compensation committee, as applicable, such board or deferred compensation committee is able to effectively make decisions with respect to the investment of plan assets, the allocation of plan assets among financial organizations and the selection of financial organizations to invest the assets of a plan without the advice of a consultant. Upon the expiration or termination of any contract or agreement entered into in accordance with this Subtitle, the board or deferred compensation committee, as applicable, shall follow the procedures set forth in this Part in awarding new contracts and entering into new agreements. Unless they are entered into in accordance with the procedures set forth in this Part and are in all other respects in substantial compliance with the requirements of this Subtitle, all contracts or agreements entered into in respect of a plan shall be null and void and new competitive proposals shall be submitted pursuant to the procedures set forth in this Part. Notwithstanding the previous sentence, no trustee who is the only trustee of a plan shall be forced to resign the position of trustee solely by operation of this section prior to the time such person’s successor as trustee has been duly qualified and appointed.

(b)Notwithstanding subdivision (a) of this section, a deferred compensation committee may contract with a firm of certified public accountants selected as a result of a competitive proposal undertaken by the local employer that expressly included in the scope of services an audit of the deferred compensation plan sponsored by the local government to be conducted in compliance with section 9005.1 of this Part. The competitive request for proposals must be in general compliance with section 9003.2 of this Part, except for the requirement of notice in the State Register. The deferred compensation committee must adhere to the criteria contained in section 9003.3 of this Part in the selection of such auditor made pursuant to this subdivision. A firm of certified public accountants selected by a deferred compensation committee pursuant to this subdivision shall be subject to the provisions of section 9003.5 of this Part. The firm of certified public accountants may be the same firm that is under contract with the local employer for other auditing services of the local employer.

(c)Notwithstanding subdivision (a) of this section, the board or a deferred compensation committee may contract with a financial organization for the purposes of investing a portion of the assets of a plan selected as a result a search conducted by the independent consultant to the board or deferred compensation committee of financial organizations that provide such services. The board or deferred compensation committee shall provide direction to the independent consultant, in writing, designating the generally recognized investment classification and sub-classification that the independent consultant is to make a recommendation to the board or deferred compensation committee after the conduct of a search of qualified financial organizations and the number of financial organizations that is to be recommended, which number shall not be less than three. The independent consultant must adhere to the criteria contained in section 9003.3 of this Part prior to recommending any financial organization to the board or deferred compensation committee. The independent consultant must recommend at least the number of financial organizations requested by the board or deferred compensation committee in each generally accepted investment classification and sub-classification and a detailed analysis of each financial organization being recommended, including a comparison of such recommended financial organization to the appropriate and generally recognized benchmarks for such investment classification and sub-classification. The board or deferred compensation committee may select one or more financial organizations for the purposes of investing a portion of the assets of a plan from the recommendation of the independent consultant. The provisions of this subdivision apply to the board and any deferred compensation committee that enters into contracts with financial organizations separately from any other contracts or agreements effecting the appointment of any trustee, independent consultant, administrative service agency, or firm of certified public accountants to provide services in respect of a plan.

9 NYCRR 9003.2 - Competitive proposals

Later State Register activity may affect this section.

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

All contracts and agreements in respect of a plan shall be awarded only after receiving competitive proposals; provided, however, that no competitive proposal or bidding shall be necessary for the board or a deferred compensation committee to serve as the trustee of a plan under its authority or with respect to financial organizations selected pursuant to section 9003.1(c) of this Part. The board or deferred compensation committee, as applicable, shall cause to be published an announcement requesting competitive proposals. Such announcement shall be published in the State Register and in the official newspaper or newspapers, if any, or otherwise in an appropriate newspaper designated for such purposes, at least 90 days prior to the date on which the contract or agreement will be awarded, and shall request proposals within a specified time period from the date of publication.

9 NYCRR 9003.3 - Criteria for selection

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

(a)In reviewing competitive proposals and selecting a trustee, independent consultant, financial organization, administrative service agency or a firm of certified public accountants, the board or deferred compensation committee, as applicable, shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man or woman acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the board or deferred compensation committee, as applicable, may reasonably rely on the evaluation of such competitive proposals made by its properly selected independent consultants in any case other than their own selection. The board or deferred compensation committee, as applicable, shall consider, as applicable, in selecting a trustee, independent consultant, financial organization, administrative service agency or firm of certified public accountants among other items, the following:

(1)the stability of the independent consultant, administrative service agency, firm of certified public accountants or financial organization as evidenced by its experience or investment record over a substantial period of time;

(2)the ability of the trustee, independent consultant, administrative service agency, firm of certified public accountants or financial organization to meet its contractual obligations, provide the services set forth in the proposals, and to comply with the reporting requirements to the board or deferred compensation committee, as applicable, and participants, and with all requirements of the plan, section 457 of the Internal Revenue Code and this Subtitle;

(3)the variety and types of investment products offered by the financial organization, and the ability to transfer among such products offered by a different financial organization with which the board or deferred compensation committee may have a contract;

(4)the trustee’s, independent consultant’s, administrative service agency's, firm of certified public accountants' or financial organization's experience with plans that meet the requirements for qualification under the Internal Revenue Code, eligible deferred compensation plans under section 457 of the Internal Revenue Code, individual retirement accounts, tax-sheltered annuities under section 403(b) of the Internal Revenue Code, and the trustee’s, independent consultant’s, administrative service agency's, firm of certified public accountants' or financial organization's familiarity with public pension systems and the fiduciary obligations of administrators, investment managers and trustees under the Employee Retirement Income Security Act of 1974 and similar Federal or State statutes;

(5)whether the trustee, investment, consulting, auditing or administrative products and services described in the proposal are of the highest quality and soundness in all respects;

(6)the overall cost efficiency of the proposal; and

(7)the overall quality and scope of the services to be provided to plan participants under the trustee’s, independent consultant’s, administrative service agency's, firm of certified public accountants' or financial organization's proposal.

All proposals shall be in writing, contain a representation that the proposal complies with all requirements of this Subtitle and clearly indicate all direct fees, indirect fees and charges.

All brokerage fees and related charges shall be negotiated so that the best competitive rate under the circumstances is obtained.

(b)Each proposal submitted under this Part shall fully disclose any sponsorship or similar arrangement. Such arrangements shall be precluded unless it can be demonstrated by clear and convincing evidence that the arrangement is cost effective.

(c)Before a contract or agreement between a deferred compensation committee and a trustee, independent consultant, administrative service agency, firm of certified public accountants or financial organization may become effective, the deferred compensation committee must submit in writing to the president the name of such selected trustee, independent consultant, administrative service agency, firm of certified public accountants or financial organization and a certification signed by its chief executive officer and chief legal officer stating that each such trustee, independent consultant, administrative service agency, firm of certified public accountants or financial organization has been duly selected to provide services in accordance with the provisions of this Subtitle.

9 NYCRR 9003.4 - Provision of diverse investments

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

The board and each deferred compensation committee shall appoint, with respect to the plan under their control, in accordance with the requirements of this Subtitle, one or more financial organizations such that amounts held under the plan may be at all times invested in one or more of a broad range of investment alternatives, including without limitation a diverse selection of fixed income and equity investments.

9 NYCRR 9003.5 - Miscellaneous requirements

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

(a)All contracts and agreements entered into with a trustee, an independent consultant, a financial organization, a firm of certified public accountants or an administrative service agency shall be in writing, shall be awarded on the basis of a competitive bid conducted or a search conducted in accordance with section 9003.1(c) of this Part in respect of the specific contract or agreement in accordance with this Part, shall not exceed five years in duration, and shall impose no penalties or surrender charges for the transfer of assets or responsibilities on expiration of the contract or agreement. Where the board or a deferred compensation committee enters into a contract or agreement with a trustee, a financial organization or organizations, and an administrative service agency and such trustee, financial organization or organizations and administrative service agency is selected by the board or deferred compensation committee independently from each other service, such contracts or agreements shall not exceed 10 years in duration. Notwithstanding the previous sentence, no trustee who is the only trustee of a plan shall be forced to resign the position of trustee solely by operation of this subdivision prior to the time such person's successor as trustee has been duly qualified and appointed.

(b)Notwithstanding subdivision (a) of this section, when the board or a deferred compensation committee deems it to be in the best interest of the plan, the board or any deferred compensation committee may extend, in writing, by vote duly taken, any contract or agreement entered into with a trustee, an independent consultant, a financial organization, a firm of certified public accountants or an administrative service agency for a duration not to exceed two consecutive one-year periods and with the consent of such party; provided, however, that any such one- year extension shall be implemented only upon:

(1)the expiration of the initial term of such contract or agreement in the case of the first one-year extension; or

(2)the expiration of the first one-year extension in the case of the second one-year extension. In the event that the board or a deferred compensation committee implements such an extension, the board or the deferred compensation committee shall describe in writing the reasons for its determination that the extension is in the best interest of the plan.

(c)Neither the board nor any deferred compensation committee may permit, nor enter into an agreement that permits, a trustee, financial organization, independent consultant, administrative service agency or any other person to select one or more other trustees, administrative service agencies, firms of certified public accountants, independent consultants, or financial organizations to provide services in respect of a plan. Notwithstanding the previous sentence, this subdivision shall not prohibit the board or any deferred compensation committee from entering into an agreement with:

(1)a financial organization selected and retained by the board or a deferred compensation committee, as applicable, in accordance with this Subtitle, that provides for self-directed investment services through a mutual fund or brokerage window arrangement sponsored by such financial organization with respect to a plan, provided that such self-directed investment services shall not be the sole investment alternative provided under a plan and that the board and the deferred compensation committee shall establish clear guidelines regarding participants' access to, and level of participation in, such self-directed investment services.

(2)a financial organization selected and retained by the board or a deferred compensation committee, as applicable, in accordance with this Subtitle, to manage the stable income fund of such plan which authorizes such financial organization to engage in one or more of the following fund management activities with respect to the assets of a stable income fund:

(i)the investment of the assets of the stable income fund in one or more guaranteed investment contracts, provided, however, that such guaranteed investment contract shall not exceed five years in duration;

(ii)the purchase of one or more wrap contracts with respect to the assets of the stable income fund; or

(iii)the periodic allocation of the assets of the stable income fund between or among two or more other financial organizations selected and retained by the board or deferred compensation committee, as applicable, in accordance with this Subtitle, provided that, in each case:

(a)the written agreement between the board or deferred compensation committee, as applicable, and the financial organization, expressly authorizes the applicable fund management activities and states that the financial organization is a fiduciary to the plan with respect to the fund management activities so authorized;

(b)any such fund management activity is undertaken by the financial organization in accordance with reasonable practices of the financial organization applicable to its clients generally, and the financial organization receives no fee or other consideration from any person (other than the plan) related to such fund management activity;

(c)the guaranteed investment contract or wrap contract, as applicable, imposes no penalties or surrender charges for the transfer of assets or responsibilities on expiration of the contract or agreement;

(d)the trustee of the plan continues to be the owner on behalf of the plan of all of the assets of the stable income fund; and

(e)any such fund management activity complies with the criteria for selection and reporting of section 9003.3 of this Subtitle and the then effective investment policies and guidelines of the board or deferred compensation committee, as applicable, related to the stable income fund.

A financial organization engaged in the management activities described in this paragraph shall do so in accordance with the procedures of this paragraph and with other provisions of this Subtitle to the extent such other provisions are incorporated into this paragraph.

9 NYCRR 9003.6 - Acknowledgment

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

Except as otherwise provided in this section, each trustee, independent consultant, administrative service agency and financial organization so appointed shall acknowledge in writing that it is a fiduciary with respect to all administrative or investment matters for which it has assumed responsibility with respect to a plan. Notwithstanding the foregoing, no such fiduciary acknowledgment shall be required pursuant to this section from a financial organization (a) which issues a guaranteed investment contract, or (b) which is the manager of an open-ended investment company registered under the Investment Company Act of 1940, as now in effect or as hereinafter amended, solely by reason of the investment, upon the specific direction of a trustee, another financial organization, the board, a deferred compensation committee or an administrative service agency acting in accordance with the terms of the plan to implement the investment directions of one or more participants, of amounts held under the plan in shares of such open-ended investment company.

9 NYCRR 9003.7 - Precluded investments

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

No contract or agreement entered into with a financial organization may provide for the investment of any amounts under the plan in any annuity contract providing for a term which could exceed five years or which is measured by one or more natural lives or any life insurance or other contract providing traditional death benefits.

9 NYCRR 9003.8 - Transfer of assets

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Dates and status

NYCRR title agency: Executive Department
Section status: Section source receipt
Source version current through: May 15, 2022

All amounts deferred under a plan, together with all necessary investment instructions, shall be paid by the State or local employer as promptly as possible, but in no event later than two business days from the applicable payroll date, to an appointed trustee which shall then pay such amounts as promptly as possible, but in no event later than one business day following receipt thereof by such trustee, to one or more appointed financial organizations for investment, and upon receipt thereof by each such financial organization shall, if not otherwise invested, be transferred to an interest-bearing account to hold such amounts in cash or cash equivalent investments within one business day, where such amounts may remain until the financial organization receive all necessary investment instructions or otherwise determines it prudent to transfer such amounts to another investment fund.

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