Capitol Hill Meeting Regarding Proposed IRS Oversight of Public Plans
September 24, 2008

On Friday, September 19, NCPERS and other public plan stakeholders joined Congressman Earl Pomeroy, Chairman Charles Rangel (by teleconference), and Democratic and Republican staff of the Ways & Means Committee, as well as representatives from the IRS and Treasury, to discuss issues related to IRS proposed oversight of public pension plans. NCPERS First Vice President Mel Aaronson represented NCPERS and the interests of plan participants at the hearing, stating that public plans are well-regulated at the state and local level, the plans are accorded full faith and credit by the sponsoring entities, and public servants have complete faith that their benefits will be delivered as promised.

Also participating in the meeting was NCPERS President Pat McElligott, who urged the IRS to work cooperatively in its future dealings with public sector plans. NCPERS General Counsel Robert Klausner, whose firm represents approximately 100 public plans across the nation, discussed the constitutional, statutory and contractual protections afforded to benefits earned in a public defined benefit plan and the conflict public plans face when mandates from Washington, DC force the plans to either violate their state laws or federal directives.

Previously, IRS had convened a roundtable with representatives of public funds to discuss the traditionally “underserved” public plan community. At the time, IRS suggested that it wanted to work in a cooperative effort. At that meeting, IRS also announced its intent to create a survey on tax qualification that it wanted to send to public plans. The survey, however, was developed without any input from the public plan community, and then was delivered to NCPERS, NASRA, and NCTR who were told to keep it secret and provide comments within 24 hours.

This most recent meeting on Capitol Hill was held at the request of the public plan community, as concern about IRS’ actions and the speed with which it was attempting to move forward prompted NCPERS and others to ask that Congress intervene. At the meeting, Congressman Earl Pomeroy asked representatives of IRS and Treasury whether they could be counted on to work in a cooperative and collaborative fashion, but those representatives refused to commit to do so.The public plan community, for its part, proposed a plan with a two-week timeframe help the IRS develop its survey of public plans.

NCPERS is continuing to work on this issue and will provide updates as appropriate.