Top Story President's Corner Industry Viewpoint Washington Report Around the Country Member Benefit Spotlight New Members About The Contributor Print Version (PDF)

IRS Advisory Committee seeks input on Public Sector Plan Recommendations

Provided by: Julian Regan, Fidelity Investments

The IRS Advisory Committee on Tax-Exempt and Government Entities (ACT) is reaching out to industry leaders including NADGCA to ensure public sector defined contribution plan recommendations the committee is developing incorporate expertise from across the government plan community. NAGDCA members who have not done so already may send comments to the ACT at one of the email addresses identified below by April 11, 2008.

The ACT serves as an advisory group to the Commissioner, Tax-Exempt and Government Entities Division of the IRS and includes members from the employee retirement plan, exempt organization and government entities communities.

ACT recommendations are aimed at facilitating improved compliance for public sector defined contribution (DC) plans. They will be finalized in late April for presentation to the IRS at a public meeting in June. The recommendations will likely encompass the following topics:

• Potential establishment of a prototype system for public sector 401(a) DC plans.
• Educational tools and initiatives the IRS might undertake to further facilitate compliance across all categories of DC plans (e.g. 401(k), 401(a), 457, 403(b)).
• General discussion of public sector compliance challenges, gaps and solutions.

As many NAGDCA members know, a prototype system, such as the system currently available to corporate 401(k) plans, provides a standardized form of agreement and may facilitate a lower cost of adoption as well as a reduced need for employer-initiated amendments as tax laws change. In addition to addressing compliance challenges, such a system may encourage more employers to adopt plans, particularly among smaller entities. The ACT recommendations will weigh these potential benefits, along with input from stakeholders and the implications to the IRS of administering such a system.

Beyond exploring the concept of a prototype system, the ACT will recommend cost-effective initiatives the IRS might undertake to serve the needs of the public sector plan community across all categories of plans. Such initiatives may include tools to assist employers and service providers in understanding and executing against statutory requirements. It should be noted that the IRS is already taking action in these areas. The ACT recommendations are intended to complement these efforts.

The ACT first contacted NAGDCA on this project in the spring of 2007 and NAGDCA immediately assisted by posting a survey to its web site. Beyond obtaining input from surveys, the ACT is meeting with industry experts and recently met with senior management from the IRS to stay abreast of IRS-led initiatives such as the Government Plans Roundtable the IRS will conduct on April 22.

As a final step in the outreach process, the ACT will include information through the NAGDCA Listserv. We encourage all members to send any comments to me at julian.regan@fmr.com or, to my fellow ACT member Susan Diehl at sdiehl@penserv.com.

The ACT looks forward to delivering cost-effective recommendations that will advance the interests of governmental employers and their hard-working employees who are saving for retirement.