Advisory Committee on Tax Exempt and Government Entities (ACT ...

PROTECTING PLAN BENEFITS:IMPROVING GOVERNMENTAL DEFINED CONTRIBUTION PLAN COMPLIANCE• Create prototypes designed for use by governmental employers so that thedocument and the administration of the plan coordinate• Provide options that make sense for governmental employers. More plans arenow being adopted by "local" governmental entities rather than "Statewide"entities. These smaller employers need simple options that are easy toadminister and monitor. For example, many of these plans are NOT used forlarge groups of employees. They may only be available to employees in acommon classification (police officers) or after a period of years which may belinked to another benefit program that has been modified due to funding issues.The issues for governmental plans are very different that those faced bynongovernmental entities. Therefore, any prototype should reflect thegovernmental plan issues and not be based on the standard prototypes whichare cumbersome and difficult to read and understand• Our clientele includes over 70 public education employers, K-12 and colleges,representing over 400,000 employees. We can assure you that thesegovernmental employers need a prototype 401(a) plan with flexibility for varioussituations. Standard plans (those not intended specifically for governmentalemployers) are cumbersome and prone to errors in design for this groupIRS <strong>Advisory</strong> <strong>Committee</strong> Finalizes Governmental Plan RecommendationsThe IRS <strong>Advisory</strong> <strong>Committee</strong> on Tax-Exempt and Government Entities (ACT) is seekinginput as it finalizes governmental defined contribution plan recommendations thecommittee will deliver to the IRS Executive Team in early June.The objective is to advance the interests of governmental defined contribution plans andtheir participants by delivering recommendations that will facilitate plan sponsors’operational and plan document compliance efforts.Recommendations will likely focus on the following initiatives for the IRS’sconsideration:• Establishment of a prototype (standardized) plan document system for certaincategories of plans• Education and guidance tailored to assist governmental plans in their complianceefforts• Tools to assist employers in administering interaction between multiple categories of plans To date, the ACT has received valuable ideas from industry experts, organizations andpractitioners, many of whom are advancing the interests of the governmental plancommunity through separate, but related initiatives. The ACT wishes to thank theseindividuals for their time and insights.ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 36