Kitty

Qualification as a governmental plan due to special rules?

Recommended Posts

Kitty    0

26 U.S. Code § 414 - Definitions and special rules:

(d) Governmental plan

For purposes of this part, the term governmental plan means 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.

The term governmental plan also includes any plan to which the Railroad Retirement Act of 1935 or 1937 applies and which is financed by contributions required under that Act ***and*** (emphasis mine) any plan of an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669).

The term governmental plan includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40)), a subdivision of an Indian tribal government (determined in accordance with section 7871(d)), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).

1) Sorry naive question....How can one determine whether their plan is a governmental plan? Is there some form to search to find out?

2) How does one determine if plan falls under the railroad act or international organizations act?

I am confused by the lack of punctuation in this statement. "and any plan of an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669). "

3) Does this section intend that this alone (international organization immunities act) qualifies the plan as a governmental plan?

4)Or does it mean they have to be a plan which the railroad act of 1935/1937 applies AND any plan of an international organization. Not either or?

Employer paying into said plan is not governmental, under any of these provisions, does that affect anything? (Other than Collective bargaining agreement with union)

Pension is:

401(a) and 501(a) tax Taft Hartley qualified defined benefit pension plan (multiemployer)

"Trust Agreement is intended to be tax exempt under Sections 401(a) and 501(a) of the Internal revenue Code, and the contributions are intended to be tax deductible by the Employers under section 404(a) of the Internal Revenue Code."

Share this post


Link to post
Share on other sites

If your employer is not governmental, it is extremely unlikely that any plan to which it contributes would be a governmental plan. The only exceptions would be plans that primarily cover employees of governmental employers, but also cover certain entities with a strong connection to a governmental entity (e.g., a union representing governmental employees). Announcement 2011-78.

If the employer contributing to the plan is an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669), it is considered governmental. This basically covers entities like the World Bank, of which the United States and other governments are members.

The Railroad Retirement program provides benefits to individuals who have spent a substantial portion of their career in railroad employment. The plan is treated as a governmental plan. But unless you have specifically been told that you are covered by the Railroad Retirement Act, this would not describe your plan.

There is no central list of governmental plans. If there is any doubt whether your plan is a governmental plan, you'd have to ask your employer. If your employer says your plan is not governmental, and you want to challenge that, you'd have to look to Announcement 2011-78 for guidance.

  • Like 1

Share this post


Link to post
Share on other sites
Kitty    0

The mention of employer was secondary because I wasn't sure if that had any bearing.

The employer is simply employing union members required to participate in the trust. It's the union pension they're contributing to under a multiemployer plan. The trust says the plan itself is an exempt organization under 401(a) and 501(a) and I'm trying to clarify whether they are governmental under the special rules provision so I can resolve several other questions I have. :/

I believe back in 1937 the pension/trust had ties to the railroad. They are an international organization.

Which is why I'm unclear as to how to determine if they're governmental. Or how to locate that info. They're less than helpful and even less knowledgeable than I am at their call center. Lol

Share this post


Link to post
Share on other sites

If they plan covers solely employees of one or more international organizations, it's a governmental plan.  If it is a multiemployer plan that covers mostly collectively bargained employees of private employers, but also covers collectively bargained employees of an international organization, it is not a governmental plan.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now