The Internal Revenue Service (IRS) has released Rev. Proc. 2012-50, which will delay the IRS determination letter filing deadline for governmental plans to January 31, 2016.
As background, governmental plans are required to file for IRS determination letters in “Cycle C” of the IRS’s five-year-cycle determination letter program. The initial Cycle C ended on January 31, 2009, but the IRS effectively extended the filing deadline by allowing governmental plans to submit in “Cycle E,” which ended on January 31, 2011. The extension did not, however, change the requirement that governmental plans file in Cycle C. Therefore, even though many governmental plans filed only last year, absent an accommodation, those plans would be required to file again at the start of the next Cycle C, beginning on February 1, 2013.
Continue reading IRS Extends Governmental Plan Filing Deadline
“What Are Other Funds Doing?”
I often hear this question at trustee board meetings. More often than not, it arises from a decision on funding or investment policy. When asked, it is expected that “the professionals” (i.e. attorney, actuary or consultant) will pull from a trove of information and divine “the answer.” The fact is, funding policy (dictated by the fund’s sponsor) and investment policy (as determined by the fund’s board) can be as varied as fingerprints.
Continue reading “What Are Other Funds Doing About. . .”
The public hearing on the IRS’s proposed regulations on the determination of governmental plan status, originally scheduled for June 5, 2012, has been rescheduled to July 9, 2012. Outlines of topics to be discussed must be submitted by June 18, 2012. Details.
A recent article in the Wall Street Journal notes the apparent conflict of public pension fund investments in private equity. The article points to the fact that certain labor unions, including the Service Employees International Union (SEIU), have criticized private equity funds while their members sit on boards which authorize investments in such funds. A specific example citied is the Ohio Public Employees Retirement System, which includes a representative of SEIU among its Board members, having increased its targeted private equity holdings. The article goes on to point out TV spots funded by the American Federation of State, County and Municipal Employees (AFSCME) which criticize Republican presidential candidate Mitt Romney regarding his tenure at Bain Consulting.
Continue reading The Private Equity Conundrum
Public fund boards are increasingly under media pressure to disclose the identity and pension benefits of retirees. Historically, disclosure requests were confined to elected officials or other government employees with public profiles (e.g. university presidents, Division I-A football and basketball coaches.) Now, disclosure efforts are focused on “high end” pensioners – typically those with annual pensions above $100,000 per year – regardless of position or notoriety.
Continue reading The Pension Disclosure Battleground
For years, governmental entities have struggled with the criteria for identification of a “governmental plan” for purposes of the tax-qualification rules of the Internal Revenue Code (“IRC”). On November 8, 2011, the IRS issued an advance notice of proposed rulemaking (ANPRM) defining “governmental plan” under Section 414(d) of the IRC. The ANPRM sets forth an extensive discussion of the IRS’s view on the characteristics of a governmental plan. It can be anticipated that through the initial comment period — ending on February 6, 2012 — and as proposed regulations work their way into final regulations, input from governmental sponsors and advisors may significantly impact the criteria for determining governmental plan status.
Link to full text of Duane Morris Alert:
Link to full text of ANPRM:
Timing is everything. In deciding to launch a blog specifically geared to the public fund fiduciary, we knew there was a broad landscape of legal issues that are now gaining wide scale attention. We intend to touch on many of these issues in subsequent installments. Hopefully, we will have the opportunity to drill down on major issues that are of importance to our clients and readers. Of the many issues that could serve as the first entry, we prepared discussions on two that seemed equally urgent: the fiduciary duty to protect pension records requested under “right to know” laws and the potential impact of bankruptcy filings of local governmental plans. With yesterday’s bankruptcy filing by the city of Harrisburg, Pennsylvania, the decision has been made for us. We value your time and hope you find this discussion, and those that follow, to be worthwhile.
Continue reading Pensions In Bankruptcy