Public Agency Plan Administrators Need to Keep Track of Participants Before They Go “Missing”

By Jeff Chang

Although “governmental” plans are not subject to ERISA and the guidance issued by the U.S. Department of Labor (DOL), public agency plans in California are subject to ERISA-like rules and would benefit from following the DOL’s recent guidance on missing participants.

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Public Employers Not Participating in Social Security Need To Tell Their Employees About the Windfall Elimination Provision and The Government Pension Offset

By Jeff Chang

Previously, we explained that California alone has thousands of public agency employers (i.e., cities, counties, special districts, school districts and JPAs) that do not contribute to Social Security, but instead provide a Social Security Replacement Plan (SSRP). We also explained how many government retirees could receive a rude awakening from Uncle Sam, through the application of the Windfall Elimination Provision (WEP) and/or the Government Pension Offset (GPO), which can adversely affect retirees (and their spouses) who participated in both Social Security and an SSRP. Many of these public employers are unaware that they are required to warn their employees of a possible reduction in their future Social Security benefits because of the WEP or GPO.

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Are Charter Schools Considered “Governmental” for Retirement Plan Purposes?

By Jeff Chang

In California, charter schools are public schools that do not charge tuition or impose special entrance requirements, but are generally operated on an independent basis from local school systems. Because of the “public” nature of these schools and the fact a number of California’s more than 1300 charter schools participate in CalSTRS or CalPERS, many retirement plan advisors and consultants assume that charter schools are “governmental” for tax code (Code) employee benefit purposes. This characterization isn’t always clear cut, but the consequences of getting it wrong can be substantial.

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Why Most Retirement Plan Advisor or Recordkeeper Searches Are Not Subject to the RFP Requirements of the Sponsoring City or District

By Jeff Chang

Many cities and their retirement plan investment advisors believe that the city must periodically issue an RFP for defined contribution plan recordkeeping or investment advisory services in accordance with the city’s RFP policy or ordinance. Having reviewed the results of numerous such RFPs, we think that most cities and special districts can do a much better job of finding and evaluating their 401(a) and 457(b) service providers by going outside of the entity’s normal RFP process. In most cases, a city or district’s general contracting department cannot properly evaluate or negotiate recordkeeping or investment advisory services – they simply don’t know enough about how the plan(s) work, what these providers do and the various ways the providers are compensated.

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Plan Administrators, Plan Committees, and Public Agency 457(b) Plans

By Jeff Chang

Many investment advisors for public agency 457(b) plans believe that their public agency clients must have a retirement plan committee in order for the plan to have a proper plan administrator or fiduciary structure. As discussed below, we think that there are a lot of good reasons: (a) not to establish a formal committee as the plan administrator; or (b) to limit the scope of a committee’s responsibilities.

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