Written by a team of practicing experts, preeminent in their fields, Governmental Plans Answer Book takes the reader step-by-step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans.
The authors' systematically answer hundreds of questions and provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. This book will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.
Governmental Plans Answer Book has been updated to include:
- New guidance on group trusts
- Updates on state legislation affecting governmental plans
- Expanded material about pension protections
- IRS focus on need for full vesting on normal retirement age as a requirement for qualified status, even for governmental plans
- Issues for governmental plans for which IRS will not issue determination letters
- Common issues in governmental plans that may preclude qualified status
- New Supreme Court case on effect of mistakes in a summary plan description (SPD)
- Guidance on when a 403(b) plan can be treated as terminated, and thus in-service distributions can be made to employees
- New guidance on what is an "unforeseeable emergency" justifying distributions from a 457 plan
- Updates to public pension asset and membership figures
- 1. Introduction to Governmental Plans
- What Is a Governmental Plan?
- Importance of Differences Between Governmental Plans and Private Plans
- 2. Structure of State and Local Governmental Plans
- General Information About State and Local Governmental Plans
- Creating Entity, Governing Law, and Individuals Covered
- Entity That Administers the Plans
- Assets in State and Local Governmental Retirement Plans
- Contributions
- Comparison of Defined Benefit Plans with Defined Contribution Plans
- Portability of Benefits Under Defined Benefit Plans
- Benefits Provided by Retirement Systems and Plans
- Special Types of Plans
- Protections for the Plans and Their Participants
- Employer Pickups
- Joint and Survivor Annuities
- State Vesting Rules
- 3. Identifying the Employer
- Reasons for Identifying the Employer
- Definitions of Employer
- Controlled Group Rules
- Independent Contractors
- Leased Employees
- 4. Obtaining Favorable Tax Status
- Effect of Favorable Tax Status
- Types of Favorable Tax Status
- Requirements for Qualified Plan (Section 401(a)) Status
- Requirements for Qualified Plan (Section 403(a)) Status
- Requirements for Tax-Deferred Annuity or Custodial Account (Section 403(b)) Status
- Requirements for Section 457(b) Status
- Requirements for Deemed IRA (Section 408(q)) Status
- Pretax Employee Contributions
- IRS Audit Activity
- Correction Procedures
- 5. Reporting
- Purpose of Reporting by State and Local Governmental Plans
- Annual Statement of Member's Account
- Other Ways in Which Retirement Systems Communicate with Plan Participants
- Summary Plan Description
- Annual Reports
- Open Meetings Laws
- Open Records Laws
- 6. Governmental Plan Funding
- Federal Rules
- Qualified (401(a)) Defined Benefit Plans
- Typical State Rules
- 7. Investment of Plan Assets
- Federal Fiduciary Requirements
- State Fiduciary Requirements
- Federal Prohibited Transaction Rules
- State Prohibited Transaction Rules
- Uniform Management of Public Employee Retirement Systems Act and Uniform Prudent Investor Act
- Legal List Statutes
- Social Investing
- State Conflict of Interest Statutes and State Codes of Ethics
- Wholly Owned Investments and Investments in Non-Publicly Traded Equity Securities
- Unrelated Business Income Tax Issues
- 8. Selecting a Service Provider
- State Law Issues
- ERISA Analogies
- Practical Steps for Meeting Fiduciary Duties in Choosing a Service Provider
- Breaches of Fiduciary Duty in Selecting a Service Provider
- Modification of Procedures for Selecting a Service Provider
- Fiduciary Duties After a Service Provider Is Selected
- 9. Remedies for Fiduciary Breach
- Criminal Penalties
- Civil Remedies
- Avoiding Fiduciary Liability
- 10. Participation
- Federal Participation Rules
- State Participation Rules
- 11. Distributions
- Common Forms of Distribution
- Federal Restrictions on Distributions
- Definition of Retirement
- Taxation of Distributions
- Rollovers and Plan-to-Plan Transfers
- Withholding on Distributions
- Reporting of Distributions
- 12. Beneficiary Designations
- Making a Beneficiary Designation
- Using Trusts
- Family Rights That Restrain a Beneficiary Designation
- Charitable Gifts
- Simultaneous Death
- Absentees
- Marriage
- Spouse's Rights
- Premarital Agreements
- Marital Agreements
- Tenancy by the Entirety
- Disclaimers
- Government Claims
- Pension Forfeiture
- Medicaid
- IRS Levy
- Unclaimed Property
- Tax-Oriented Estate Planning
- Marital deduction
- Qualified Domestic Trust for an Alien
- Who May Give Advice?
- Common Mistakes
- 13. Domestic Relations Orders
- Reason for Retirement Plan Domestic Relations Order Provisions
- Elements of a Domestic Relations Order
- Elements of a Plan-Approved Domestic Relations Order
- PADRO Distribution Before a Participant's Severance
- Survivor Benefits, Beneficiaries, and Loans
- State Variations
- Deciding Whether an Order Is a PADRO
- Plan Administration Procedures
- Tax Treatment of a Distribution Under a Deemed QDRO
- Tax Treatment of a Pre-2002 or Post-2010 PADRO Distribution from a 457(b) Plan
- Tax Treatment of an Ineligible Plan’s PADRO Distribution
- Bankruptcy
- Divorce Negotiation
- Lawyer's Professional Conduct
- 14. Impact of Bankruptcy Law on Participant Interests in Governmental Plans
- Bankruptcy Overview
- Governmental Plan Concerns
- Chapter 7 Considerations
- Chapter 13 Considerations
- APPENDIX A. Selected Characteristics of Public Retirement Systems
- APPENDIX B. Uniform Management of Public Employee Retirement Systems Act (1997)
- APPENDIX C. Uniform Prudent Investor Act
- APPENDIX D. Recent Court Decisions of Interest Involving Governmental Plans
Carol V. Calhoun is a shareholder of Calhoun Law Group, P.C., Bethesda, MD. A majority of her practice is the representation of state and local retirement systems and other governmental entities in the employee benefits area. She represents clients before the Internal Revenue Service, U.S. Department of Labor, and Pension Benefit Guaranty Corporation, as well as conducting ongoing counseling.
She is the founder and editor of the Employee Benefits Legal Resource Site, www.benefitsattorney.com, a legal research source for employee benefits attorneys and other professionals. Ms. Calhoun is the author of a chapter in the 457 Answer Book, published by Aspen, and co-author of the legal analysis section of Tobacco Divestment and Fiduciary Responsibility, A Financial and Legal Analysis, published by the Investor Responsibility Research Center, as well as numerous articles on employee benefits law and insurance product taxation.
Ms. Calhoun is a charter fellow of the American College of Employee Benefits Counsel. She was formerly a member of the Board of Editors of the Legal-Legislative-Regulatory Update section of Benefits Quarterly. She is a member of the American Bar Association Section of Taxation Employee Benefits Committee and formerly chaired its Subcommittees on Governmental Plans; 457, 403(b), and Exempt Organizations Issues; Government Submissions; and Distributions. She is a frequent speaker on employee benefits issues and is a member of the National Association of Public Pension Attorneys and the National Council on Teacher Retirement. Ms. Calhoun received her JD from the Georgetown University Law Center, where she was Associate Editor of The Tax Lawyer. She obtained her BA from The Johns Hopkins University, where she was selected for the Pi Sigma Alpha political science honor society and the Mayor's Fellow program.
Further information on Ms. Calhoun can be found in the latest edition of Marquis Who's Who in America.
Cynthia L. Moore is an attorney who specializes in issues affecting state and local government retirement systems. She served the National Council on Teacher Retirement (NCTR) as its Washington Counsel by advising NCTR members on federal legislative and regulatory issues that affect the operation of state and local government retirement systems.
Ms. Moore has conducted many surveys on state laws affecting state and local government retirement systems, including those that serve teachers. The surveys cover fiduciary laws, governance, cost of living adjustments, pension portability, and benefit increases.
She has made presentations on pension issues in 43 states and also in Europe to retirement administrators, legislators, governmental officials, active and retired employees, and labor officials.
Before becoming a lawyer, Ms. Moore was a member of former Congressman Dan Glickman's legislative staff for five years. She covered such diverse issues for him as health, tax, Social Security, and agriculture. She graduated from Case Western Reserve Law School in Cleveland, Ohio. She served as Notes Editor of the Law Review. She is a member of the bar of the Commonwealth of Virginia, the District of Columbia, and the United States Supreme Court.
Keith Brainard is the research director for the National Association of State Retirement Administrators (NASRA) and, as such, collects, prepares, and distributes to NASRA members news, studies, and reports pertinent to public retirement system administration and policy. NASRA members are the directors and administrators of 82 statewide public retirement systems in the United States. Combined, these systems hold assets of more than $2 trillion in trust to fund pension and other benefits for most of the 22 million working and retired employees of state and local governments in the United States.
Mr. Brainard is the author of the NASRA white paper “Myths & Misperceptions of Defined Benefit and Defined Contribution Plans,” and co-author of a 2004 Pension Research Council working paper, “Profitable Prudence: The Case for Public Defined Benefit Plans,” which describes the economic effects of public employee pension plans. He also maintains the Public Fund Survey, an online compendium of public pension data sponsored jointly by NASRA and the National Council on Teacher Retirement.
Mr. Brainard previously served as manager of budget and planning for the Arizona State Retirement System, and he provided fiscal research and analysis for the Texas and Arizona legislatures. He has a master's degree from the University of Texas-Austin, Lyndon B. Johnson School of Public Affairs. He lives with his wife, Katie, and their children in Georgetown, Texas.
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