2017 Supplement to the Governmental Plans Answer Book Published
(Posted on October 3, 2016 by )

The 2017 supplement to the Governmental Plans Answer Book has now been published. It reflects substantial new developments in the area over the past year.

New materials include the following:

  • The IRS’s proposals to eliminate or substantially modify the determination letter process (see Q 4:135).
  • Proposed Department of Labor regulations concerning the definition of a fiduciary (see Qs 7:1 through 7:4) and fee disclosure requirements for service providers (see Q 8:22).
  • Revenue Ruling 2014-9, which provided guidance to plans concerning the circumstances under which they could accept rollovers (see Qs 4:22 through 4:27).
  • Notice 2015-07, discussing the extent to which a governmental plan can cover employees of charter schools (see Q 1:17).
  • Update on state funding issues, including the role of state policies requiring payment of the annual required contribution in increasing the chance that employers would make their required contributions (see Qs 6:63 through 6:66).
  • Recent developments concerning same-sex marriage and the Equal Employment Opportunity Commission guidance treating discrimination based on sexual orientation as sex discrimination in violation of Title VII of the Civil Rights Act of 1964 (see Qs 1:38 and 1:45).
  • New explanations in the Beneficiary Designations and the Domestic Relations Orders chapters to follow the Supreme Court’s decision concerning same-sex marriage (see Qs 12:32, 12:39, 12:45, 12:46, 13:31, 13:37, and 13:62).
  • Recent major state legislative changes affecting state and local governmental plans (see Q 2:122).
  • The Supreme Court’s ruling that inherited IRAs are not “retirement funds” and are no longer exempt from the property of the estate under federal law (see Q 14:38).
  • Analysis of why proceedings about child support result in difficult orders (see Q 13:22).
  • Review of the effect of a recent court decision about whether a beneficiary designation must be in its maker’s handwriting (see Q 12:5).
  • Discussion of whether exemptions are a potential concern to debtor participants’ interests in governmental plans (see Q 14:31).
  • Controversy regarding public plan divestment in fossil fuel stocks (see Qs 7:84, 7:85, and 7:100).
  • Impact of a participant’s plan loan on the Chapter (7 or 13) under which the participant can obtain relief (see Q 14:12).
  • Revisions to discussions explaining a plan’s administrator discretionary power to decide whether a participant had made a beneficiary designation (see Chapter 12).
  • Expanded explanation of whether a domestic relations order (DRO) directed to a retirement plan can be used to pay child support (see Q 13:21).
  • Updated explanations about the effect of premarital agreements and marital agreements to follow the recent Uniform Premarital and Marital Agreements Act (see Qs 12:49 through 12:53).
  • A 2014 court decision as an example of domestic relations courts’ orders that treat a person who never was the participant’s spouse and was never even a putative spouse as though the nonspouse is the participant’s nonchild dependent, even if the facts known to the court make clear that the ostensible dependent is no longer in the participant’s household (see Q 13:19).
  • Recent developments in case law affecting governmental plans, including numerous new decisions in constitutional disputes, and new sections labeled “Fiduciary Duty” and “Correction of Errors” with relevant cases (see Appendix E).

Read more.

2017 Supplement to the 457 Answer Book Published
(Posted on August 25, 2016 by )

The 2017 Supplement to the Sixth Edition of the 457 Answer Book was published on August 10, 2014. Carol V. Calhoun is the author of Chapter 1, History of 457 Plans, and Chapter 14, Miscellaneous Issues.

The 457 Answer Book is an in-depth resource that provides answers to the questions that tax-exempt organizations, state and local governments, their accountants, tax and legal advisors, 457 administrators, product providers, and investment counselors need to know.

Guiding readers through all aspects of 457 plan administration — from installation through the audit process — the 457 Answer Book describes: the duties and responsibilities of those performing the functions; the required legal, accounting, and administrative tasks; checklists that facilitate control of each administrative process; and suggested forms.

Read more.

Carol V. Calhoun Quoted in BNA Article, “IRS Rules Keep Status Quo for Many Governmental Plans”
(Posted on February 15, 2016 by )

Bloomberg BNAThe article, dealing with the proposed IRS regulations dealing with the definition of normal retirement age for governmental plans, is subscription only. However, in relevant part, it said:

The proposed rules generally were favorable, allowing plans to maintain the status quo in most cases, Carol V. Calhoun, president of the Bethesda, Md.-based Calhoun Law Group, [now Counsel at Venable LLP, Washington, DC] told Bloomberg BNA on Feb. 4.

“They say a governmental plan does not have to define normal retirement age, that it will be at whatever point you can receive a normal retirement benefit under the plan that is not reduced actuarially,” Calhoun said. For instance, the rules said that if a governmental plan says that normal retirement age is 25 years of service, then that will be considered the normal retirement age, she said.

Qualified Government Plan

A qualified governmental plan is one that is established and maintained for its employees by the federal government, a state government or political subdivision thereof, or by any agency or instrumentality of the federal or state government. The proposed rules “basically took all of the normal retirement ages that any state-wide plan has and they said all of those were going to be acceptable,” Calhoun said.

More discussion of the proposed rules can be found at this link.

Proposed Regulations: Normal Retirement Age for Governmental Plans
(Posted on January 27, 2016 by )

irsOn January 27, 2016, the IRS issued proposed regulations governing the extent to which governmental pension plans must comply with the rules governing normal retirement ages. In general, the rules are a positive step from the perspective of governmental plan sponsors, but they contain a few potential pitfalls.


The qualification rules of the Internal Revenue Code (“Code”) provide for several rules that are based on a plan’s normal retirement age. For example, a pension plan cannot pay in-service benefits before the earlier of age 62 or normal retirement age. Benefits must be fully vested at normal retirement age. Benefits under the plan must be definitely determinable (i.e., subject to calculation, rather than at an employer’s discretion) as of normal retirement age. Read more.

Economically Targeted Investments: Department of Labor Guidance Leaves Many Questions Open
(Posted on December 7, 2015 by )

deptlaborOn October 22, 2015, the Department of Labor issued new guidance, Interpretive Bulletin 2015-01, relating to the fiduciary standards under ERISA in considering economically targeted investments (“ETIs”), or investments chosen to foster specific social goals, such as economic development and/or home ownership in a particular state or area. What does this guidance mean for fund fiduciaries?

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Domestic Partnership Converted Retroactively to Marriage After Death Provides Basis for Spousal Benefits
(Posted on November 6, 2015 by )

IRS determination letters after 2016; what are the options?
(Posted on July 28, 2015 by )

Internal Revenue ServiceAs previously discussed, faced with substantial budget cuts, the Internal Revenue Service (“IRS”) has announced that it is eliminating most determination letters (letters concerning the qualified status of retirement plans, which gives rise to numerous tax benefits), effective December 31, 2016. (Announcement 2015-19.) In the past, individually designed retirement plans were able to obtain a determination letter once every five years, during a cycle provided by the IRS. The most likely new regime will involve making determination letters on individually designed plans available only when a plan is first adopted, or when it is terminated. Between those dates, the only way to ensure qualification other than filing a declaratory judgment action with the Tax Court is likely to be to adopt annual updates put out by the IRS that will include model wording for amendments.

For entities that maintain a retirement plan, the new regime may mean that they discover qualification issues only on audit, when it is too late to fix the issue. And the potential penalties on audit (for the employer, the trust under the plan, and the employees) are, as set forth in a prior article, huge. What steps should a plan administrator take to ensure the qualification of a plan after that point? Read more.

Governmental Plan Determination Letters: Last Chance?
(Posted on July 21, 2015 by )

irsOn July 21, 2015, the Internal Revenue Service (“IRS”) issued Announcement 2015-19, in which it announced that it would be making substantial changes to the determination letter program intended to allow retirement plan sponsors to ensure that their plans are qualified (eligible for tax benefits). This announcement will affect all retirement plans intended to be qualified, but will create particular issues for plans maintained by governmental employers (“governmental plans”). Read more.

Employee benefits effects of Supreme Court same-sex marriage decision
(Posted on July 14, 2015 by )

SCOTUSOn June 26, 2015, the Supreme Court struck down all state bans on same-sex marriage in Obergefell v. Hodges. For employers, this decision raises the issue of what changes must be made in employee benefits to reflect the decision.

For this purpose, we will look at three categories of employers: those that have already been offering benefits to same-sex spouses, those that have not previously offered benefits to same-sex spouses, and those that have been offering benefits to domestic partners.

Read more.

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