Using a Section 115 Trust to Help Manage Pension Obligations

An increasing number of cities, public agencies and special districts are investigating the use of an Internal Revenue Code section 115 trust to help them better manage the short-term costs and long-term liabilities associated with pensions. What is a 115 trust and how does it work?

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New Home, Same Great Information

As some of you may have heard, Susan Neethling and I recently joined the law firm Best Best & Krieger LLP. Like many changes of this sort, this one was bittersweet. We are pleased, though, to continue bringing you the latest public benefits information news. We have joined a unique powerhouse in the highly specialized area of public sector benefits. The attorneys in BB&K’s Employee Benefits & Executive Compensation practice group serve more than 200 California cities and public agencies. As a team, we hope to provide more information to the municipalities, special districts, school districts and other public sector clients who rely on us for effective counsel.

Starting this week, Focus on Public Benefits is back up and running after a brief hiatus during the transition. Thank you for your patience, and, as always, I hope to hear from you soon! I can be reached at (916) 329-3685 or jeff.chang@bbklaw.com. Learn more at bbklaw.com.

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Why Hire A “3(38)” Adviser For A Public Agency 457(b) Or 401(a) Plan?

Most public sector retirement plan sponsors understand that even though their plans may not be subject to the fiduciary duties and responsibilities of ERISA, they are still subject to fiduciary duties under applicable State law.  Moreover, certain States like California have deliberately imported important ERISA concepts and standards into their State laws governing the behavior of public sector retirement administrators and fiduciaries. These duties, among other things, require plan fiduciaries to make sure that all fees and expenses paid from plan assets (that is, participants’ accounts) are necessary, appropriate and reasonable. See, e.g., Cal. Const., article XVI, section 17 and Cal. Govt. Code section 53213.5. Continue reading

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Does Your Plan Have A Proper Fiduciary Structure?

Recently, we have dealt with an “epidemic” of retirement plans, both very large and very small, that all have the same problem – the lack of a proper fiduciary structure.  Why? As with so many personnel and benefits-related programs, new managers and new advisers simply carry on with current and past practices – without looking at the bases for these practices. Unfortunately, when we are asked to look at the fundamentals of a program, we often see that many incorrect assumptions have been made. Continue reading

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Chapter 32: How “Not” To Transition To A New Record-Keeper

Time and time again plan sponsors seriously disadvantage themselves and their plan participants by announcing the migration of their plan from one record-keeper to a new record-keeper before all the conditions for a smooth transition have been fulfilled.  Record-keepers know this and take full advantage of this all the time.  Usually, the plan sponsor is so happy to have “completed” its RFP process that it treats the selection of a record-keeper as the end of the plan migration process – rather than its beginning.  Continue reading

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