Rhode Island issue

[Guest David Lacy]

On Carol's checklist for governmental plans, she says: "These rules may be a source of problems for governmental plans, e.g., Rhode Island, where a court recently held that an attempt to roll back benefits to comply with the section 415 limits violated state constitutional provisions."

I have heard this situation in Rhode Island refered to a number of times, but no specifics are given. Carol, or anybody, can you link me to a case citation, or summary, or anything that would help learn more about what happened there. It would be very nice to have a cautionary tale to tell other people. I would like something that can be shown to other people to warn about this issue.

[mbozek]

RI enacted legislation which resulted in the state retirement plan paying benefits to state legislators which exceed the the amount of their compensation, which is a violation of the IRC 415 limits. The IRS audited the plan and the state agreed to reduce the benefits to the 415 limits to prevent the plan from being disqualified. Apparently the state court held that the benefits cannot be reduced.

[AndyH]

Of course not. Why would RI judges allow reductions in pensions for legislators when each judge's pension is detemined by separate special legislation voted on by legislators?

The RI Supreme Court has made some cooky pension decisions that would seem out of their jurisdiction.

I am not a lawyer but I have first hand knowledge of at least one other one that defied sensible explanation.