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The “Mechanics” of Combining Your Agency’s Multiple 457(b) Plans
Many public agencies have come to sponsor and maintain multiple 457(b) plans, which can unnecessarily increase the compliance burden as well the fees paid by participants. Although the human resource and finance managers who typically oversee these plans know that it...
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...
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...
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SECURE 2.0 Impacts on Governmental Plans
This post highlights many of the significant law changes affecting governmental retirement plans that are part of the recently adopted Secure 2.0 Act of 2022 (the Act). The table below simply highlights “what” is changed, “when” the change takes effect, and “whether”...
More on the Documentation of Employer “Pick-up” Contributions
In an earlier post, we explained what “pick-up” contributions are, and how they are used by many governmental employers to convert mandatory after-tax employee contributions into pre-tax contributions. IRS Revenue Ruling 2006-43 contains specific guidance on what the...
Can Your Hospital District Have a 403(b) Plan?
Of California’s more than 75 public healthcare districts, a significant number of them maintain Internal Revenue Code (IRC) section 403(b) plans. The question is: of those that have them, are they “eligible” to have them? We raise this issue because we have become...
When “Public” Does Not Refer to “Governmental”
Recently, a retirement plan advisor asked whether a “public” charity was “governmental” and eligible to maintain a non-ERISA retirement plan. This post explores some of the terminology that is used by the IRS, and in the retirement industry, and how one does not...
Multiple Plans May Result in Excessive Participant Loans
Having more 457(b) or 401(a) plans than you really need can create administrative headaches, cost participants unnecessary fees, and sometimes result in “excessive” participant loan situations. If an employee participates in a 457(b) or 401(a) plan, it is likely that...
Many Governmental 401(a) Plans Must Be Restated By July 31, 2022
In addition to the thousands of private sector 401(k) and 401(a) plans that must be restated by this July 31st, practically all governmental 401(a) plans using recordkeeper-provided plan documents – in other words, pre-approved plan documents – must also be restated....
The Proper Timing of 457(b) Deferral Elections
Although many people think that governmental section 457(b) plans and private sector 401(k) plans are the same – because they both allow pre-tax deferrals of similar amounts of income – they are not the same. Due to their differing origins, their rules and...
Differences Between Plan Administrators, Third-Party Plan Administrators, and Recordkeepers
Sponsors of governmental retirement plans seem to be hiring, firing, or transitioning to new third-party administrators (TPAs) or recordkeepers all the time. The differing roles, duties and legal responsibilities of plan administrators, TPAs, and recordkeepers need to...
Are Your Employer “Pick-Ups” Properly Documented?
Although most public employers are familiar with the concept of a “pick-up” of employee mandatory contributions, many do not appreciate what is required to properly document a “pick-up”. This post reviews the basics of employer pick-ups and the documentation...
When is a Public Employee a “Qualified Participant” in a Social Security Replacement Plan?
As previously discussed, a public agency that does not have a section 218 agreement has a choice of participating in Social Security or providing a Social Security Replacement Plan (SSRP). Although many California local governments rely on CalPERS as their principal...
Do You Have An Appropriate OPEB Document?
Due to the rising costs of health care and health insurance, pressure from union bargaining partners, and the application of the “equal contribution rule” for public agencies that provide health coverage through CalPERS, many California cities and special districts...
School District 403(b) Plans and Participant-Directed Investments
This post addresses the availability of participant-directed investments in practically all California public school district 403(b)s and why the special rules mentioned in California Government Code section 53213.5 must apply if the 403(b) plan is employer-sponsored....