Governmental Workers Retiring in Greater Numbers
(Posted on May 30, 2013 by Carol V. Calhoun)

Both the federal and state governments are reporting increases in the pace of employee retirements in recent years. The causes are complex, including everything from a bulge of workers hired in the 1960s and now retiring to flattened public sector salaries and furloughs. However, in at least some instances, part of the motivation is that employees who have maxed out on their pensions may have a financial incentive to retire (or even find jobs in the private sector) in order to begin collecting retirement benefits.

In some instances, the increasing pace of retirements may even be welcome. For governments facing budget shortfalls, they may result in opportunities to shrink the workforce, or at least to replace highly paid senior employees with junior employees paid at lower rates. However, in at least some instances, the surge in retirements has caused shortages in employees with much needed experience, and/or transitional issues when senior employees are not able to train more junior people before leaving.

Checklist of Federal Tax Law Rules Applicable to Public Retirement Systems Updated
(Posted on May 21, 2013 by Carol V. Calhoun)

The Checklist of Federal Tax Law Rules Applicable to Public Retirement Systems has now been extensively updated. The chart, which identifies each of the Internal Revenue Code sections that does and does not apply to governmental plans, now includes links to each of the Internal Revenue Code sections referenced, as well as various updates to reflect recent legislative and administrative developments.

Plan Found to Be “Governmental” Even Though Originally Established by Private Entity
(Posted on May 20, 2013 by Carol V. Calhoun)

ERISA section 3(32), 29 U.S.C. § 1002(32), defines a governmental plan (exempt from Title I of ERISA) as:

a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.

Internal Revenue Code section 414(d) defines a governmental plan as:

a plan established and maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.

So what happens if a plan is established by a private entity, but later maintained by a government or one of its agencies or instrumentalities? The Eastern District of Louisiana considered this issue in Smith v. Regional Transit Authority (May 10, 2013).

New article: Maryland to End Benefits For Employees’ Domestic Partners
(Posted on May 17, 2013 by Carol V. Calhoun)

Carol V. Calhoun‘s article, “Maryland to End Benefits for Employees’ Domestic Partners,” has now been published in Baltimore OUTloud. The article discusses the trend toward eliminating domestic partner benefits as more states enact same-sex marriage, and the pros and cons of doing so.

Forbes: Rhode Island State Pension Admits History Of Kickbacks And SEC Inquiry
(Posted on April 30, 2013 by Carol V. Calhoun)

An article in Forbes magazine alleges that the Employees’ Retirement System of Rhode Island paid kickbacks to placement agents. As most are aware, the Employee Retirement Income Security Act of 1974 (ERISA) does not apply to governmental plans. So, what kinds of protections are available in the case of kickbacks from public retirement systems? Read more

New Revenue Procedure Establishes 403(b) Pre-Approved Plan Program
(Posted on April 29, 2013 by Carol V. Calhoun)

The IRS will start accepting applications for opinion and advisory letters for prototype and volume submitter 403(b) plans (tax-sheltered annuities and custodial accounts for certain tax-exempt and governmental employers) on June 28, 2013. Read more

CalSTRS Finalizes Divestments from Gun Manufacturers
(Posted on April 23, 2013 by Carol V. Calhoun)

An article in Pensions & Investments reports that in the wake of the school shooting in Newtown, Connecticut, the California State Teachers Retirement System (CalSTRS) has approved the divestiture of holdings in two gun manufacturers that make weapons that are illegal in California.

Governmental Health Plans Face New Fee for 2014-2016
(Posted on April 16, 2013 by Carol V. Calhoun)

One of the least noticed provisions of the The Patient Protection and Affordable Care Act (PPACA), sometimes referred to as Obamacare, is a transitional reinsurance fee applicable to 2014 through 2016. The Department of Human Services issued regulations implementing this provision on March 11, 2013. These regulations clarify that although governmental entities are exempt from tax and from most of ERISA, health plans that governmental employers maintain for their employees will be subject to the new fee.

Expanded Correction Program for 403(b) Plans
(Posted on April 4, 2013 by Carol V. Calhoun)

Rev. Proc. 2013-12 for the first time allows 403(b) plans (tax-sheltered annuities or custodial accounts for employees of public schools, churches, and certain other tax-exempt organizations) the same ability to correct plan errors under the Employee Plans Compliance Resolution System (“EPCRS”) as is provided in the case of qualified plans. The IRS has now issued a plain language “Fix-It Guide” for 403(b) plans that discusses common mistakes, how to avoid them, and how to fix them if they occur.

Same-Sex Marriage: Thinking About Employee Benefits
(Posted on December 28, 2012 by Carol V. Calhoun)