Guest alan24 Posted March 14, 2005 Report Share Posted March 14, 2005 Has anyone run up against a situation where the State law (i.e Constitution, etc.) regarding a State pension plan differs from the Internal revenue Code? If so, what is the result...does the plan not qualifiy as a "qualified plan", which seems to be a harsh result. Link to comment Share on other sites More sharing options...
Everett Moreland Posted March 14, 2005 Report Share Posted March 14, 2005 Please describe the state constitutional provision you are concerned about. Link to comment Share on other sites More sharing options...
Guest alan24 Posted March 14, 2005 Report Share Posted March 14, 2005 For instance, as an example, the State Constitution may allow a participant to borrow up to 75% of his account balance, whereas the IRC limits the loan amount to 50%. Since the Constitution is not easily changed, what can the State do-it appears unfair to disqualify the plan. Link to comment Share on other sites More sharing options...
GBurns Posted March 14, 2005 Report Share Posted March 14, 2005 The question might be whether or not the IRC section that you are referring to applies to this or a governmental pension plan? What IRC section has this 50% limitation? What IRC section governs this particular state pension plan? George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction) Link to comment Share on other sites More sharing options...
Guest alan24 Posted March 14, 2005 Report Share Posted March 14, 2005 I am jsut trying to find out whether anyone has encountered a situation where the Code and the State law at are odds with one another--what happens? The 50% loan provision was just by way of example. Thanks. Link to comment Share on other sites More sharing options...
mbozek Posted March 14, 2005 Report Share Posted March 14, 2005 The plan is still subject to the IRC. The plan is usually fixed to conform to the IRC after the violation is discovered without any consequences to employees. The NJ state pension fund got into trouble with the IRS because one year NJ removed plan assets to balance its budget. The IRS required that NJ add the exclusive benefit rule and promise not to do it again. NYC got caught for the same violation last year with the same result. A few years ago the RI state retirement plan got into trouble with the IRS because it permitted benefits in excess of the 415 limits. mjb Link to comment Share on other sites More sharing options...
Guest alan24 Posted March 15, 2005 Report Share Posted March 15, 2005 Thanks--u have been very helpful. This is just such a great resource for ERISA professionals and I greatly appreciate everyone's comments. Link to comment Share on other sites More sharing options...
david rigby Posted March 15, 2005 Report Share Posted March 15, 2005 Note that several places in ERISA and the IRC state that governmental plans are exempt, but must still comply with pre-ERISA IRC. See for example, IRC 411(e)(2). I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
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