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Determination Letter - Govermental Plans


Guest ResearchGirl
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Guest ResearchGirl

I was curious about how many governmental plans (especially those for local muncipalites, etc. where the current document is a series of ordinances) are actually applying for IRS determination letters. If so, under Cycle C or are you delaying to Cycle E? And is anyone converting to an actual plan document?

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All of the governmental plans that I advise have long since converted from ordinances to a plan document, and I recommend to each that they apply for a D-letter. The design of those I advise fit on my prototype, so neither Cycle C nor E.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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  • 4 weeks later...
You have a prototype that avoids ERISA, or do you have them apply those rules to their plan anyway?

Sort of both, John. The IRS-approved EGTRRA prototype I use has the following provision:

Notwithstanding any other provision of the Plan to the contrary, if all business organizations comprising the Employer are the Government of the United States, the government of any State or political subdivision thereof, or an agency or instrumentality of any of such, then the following provisions do not apply: a) minimum coverage requirements of IRC § 410(b) (as referenced in section 2.05); b) the minimum participation standards of IRC § 410© (as found in Part 2, with regards to the minimum required service being no more than one (1) Eligibility Year (two (2) Eligibility Years if 100%, immediate vesting is selected) and no greater than age 21 years as the minimum required age) to the extent varied (if at all) by a 'Governmental Addendum' to the Adoption Agreement; the nondiscrimination requirements found in Part 3 and as required by IRC § 401(a)(4) (as found in Part 3, with regards to the allocation of Profit Sharing Contributions) and therefore, the governmental Employer may in declaring a contribution, specify which employees' Plan Accounts will receive what portions of that contribution; and d) the minimum vesting requirements of IRC § 411 (as found in Part 9) to the extent varied (if at all) by a 'Governmental Addendum' to the Adoption Agreement.

Other aspects of ERISA are observed. In addition to being a written plan, the plan documents name a fiduciary and apply the ERISA claims procedures even for governmental plans.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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  • 2 months later...
Guest Pension Girl
You have a prototype that avoids ERISA, or do you have them apply those rules to their plan anyway?

Sort of both, John. The IRS-approved EGTRRA prototype I use has the following provision:

Notwithstanding any other provision of the Plan to the contrary, if all business organizations comprising the Employer are the Government of the United States, the government of any State or political subdivision thereof, or an agency or instrumentality of any of such, then the following provisions do not apply: a) minimum coverage requirements of IRC § 410(b) (as referenced in section 2.05); b) the minimum participation standards of IRC § 410© (as found in Part 2, with regards to the minimum required service being no more than one (1) Eligibility Year (two (2) Eligibility Years if 100%, immediate vesting is selected) and no greater than age 21 years as the minimum required age) to the extent varied (if at all) by a 'Governmental Addendum' to the Adoption Agreement; the nondiscrimination requirements found in Part 3 and as required by IRC § 401(a)(4) (as found in Part 3, with regards to the allocation of Profit Sharing Contributions) and therefore, the governmental Employer may in declaring a contribution, specify which employees' Plan Accounts will receive what portions of that contribution; and d) the minimum vesting requirements of IRC § 411 (as found in Part 9) to the extent varied (if at all) by a 'Governmental Addendum' to the Adoption Agreement.

Other aspects of ERISA are observed. In addition to being a written plan, the plan documents name a fiduciary and apply the ERISA claims procedures even for governmental plans.

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