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HomeMy WebLinkAboutDocumentation_Pension General_Tab 03_05/04/2009 (2)SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD EMERGENCY MEETING HELD 1/28/09 Attorney Bonni Jensen attended by telephone and advised in order to complete the filing for an IRS de#ermination letter, an additional $500 was needed by January 31 for the IRS Voluntary Compliance Approval Program, under which the IRS allowed pension plans to voluntarily amend their plans to make timely amendments, in order to correct two amendments made in the 1990's that did not meet the IRS time requirement deadlines. 2. Chair Rhodes suggested a scope of the Village audit i done; then take it from there. letter to the Village Council, to confirm the n regard to the pension plan, and what was 3. Consensus was to place on a future agenda discussion of procedure for filing amendments to the pension plan with the IRS-to do the amendments and then have the IRS review them, or have the IRS review them first. 4. Approved $500 for the IRS Voluntary Compliance Approval Program. 5. Pension Coordinator McWilliams requested discussion on a future agenda regarding how to handle needs for emergency funds in case a quorum could not be assembled. END OF SYNOPSIS DRAFT TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND EMERGENCY MEETING MINUTES January 28, 2009 I. Call To Order And Roll Call An emergency meeting of the Tequesta General Employees' Pension Trust Fund Board of Trustees was held at the Tequesta Village Hall, 345 Tequesta Drive, Tequesta, Florida, on January 28, 2009. The meeting was called to order at 3:00 p.m. A roll call was taken by Pension Coordinator McWilliams. In attendance at the meeting were: General Employees' Pension Board Members Chair Michael Rhodes, Board Member Archie C. Mangum, Jr., Board Member Deanna Mayo, and Board Member Michelle Gload. Secretary Carl Hansen was absent from the meeting. Attorney Bonni Jensen attended via telephone. Senior Accountant Monica Rahim, and Pension Coordinator Lori McWilliams were also in attendance. 11. Authorization to Pay $500 IRS Fee for Voluntary Correction Program Attorney Jensen advised that the Board had voted to file for an IRS Determination letter, and part of the process the IRS would go through in making its determination was whether the pension fund documents had been amended timely. In the early years of the plan during the 1990's, there were two provisions that should have been added and were not. Therefore, Attomey Jensen's advice was to use the IRS Voluntary Compliance Approval Program, under which the IRS allowed pension plans to voluntarily amend their plans to make timely amendments. They would allow the plan to make an amendment now and treat it as if it had been done timely, in the 1990's. The choices were to not file for the IRS determination letter at this point and file for it February 2, 2010 through January 31, 2011, and go through this same process again, or go through the Voluntary Compliance and Approval Program and file by January 31, 2009 when the cost would be half of the usual $1,000 fee, or $500 to get this corrected. Attorney Jensen explained that if one went through the determination letter process and was found not to be compliant, there were penalties which were substantially more than the fee for voluntary compliance. The question today was whether to continue forward with the determination letter process and go through the voluntary correction program and pay the $500 fee. Chair Rhodes asked if the plan would be assessed any penalty if they proceeded with the determination letter process and the voluntary compliance program. Attorney Jensen stated there should be no penalties. Board Member Mangum asked if the plan had been amended erroneously in the past in some way; Attorney Jensen assured the Board that the plan had not been amended erroneously. What had happened was the IRS had said you have until January Emergency Meeting Minutes Board of Trustees of General Employees' Pension Trust Fund January 28, 2009 2 31, 1995, for example, to make a certain change--it was just not done by the IRS deadline date. Pension Coordinator McWilliams commented that Attorney Jensen had reviewed the total plan in the past, and asked if she thought there would be any additional changes required that would incur additional costs, to which Attorney Jensen responded she had gone through all the requirements, and the only thing that had to be met was a series of amendments made during the 1990's that the plan did contain language for, but it had been done back in time. Attorney Jensen advised that after the IRS review, they might want a word inserted or a word changed, which should not incur additional costs, but in Attorney Jensen's opinion, the plan did meet all the IRS requirements. Chair Rhodes confirmed with Attorney Jensen that the two missing issues timing wise from the past dealt with limitation on compensation and rollovers. The attorney explained that a lot of plans did not do the rollover amendment because most government plans paid out in monthly payments and not rollovers. Chair Rhodes asked if there was any possible appeal. Attorney Jensen felt they would say, too bad, and charge a tough penalty, but if one went through the determination letter process, then you were under their rules which would result in what they called an audit cap, where they had certain penalties assessed for the audit and the amount of penalty was determined by which type of amendment you had not met. The IRS had indicated they would negotiate the amount, but she could not guarantee that. Chair Rhodes asked, when the plan had been reviewed and audited by the Village auditors, if that was one of their standard compliance tests whether or not the plan was in compliance with IRS. Attorney Jensen responded, yes, and they would give a determination that they believed the plan to be in compliance with the Internal Revenue Code. The plan had been included in the scope of the Village audit. Board Member Mangum commented usually auditors were more interested in the numbers than in legal compliance requirements. Pension Coordinator McWilliams commented the issue at hand was whether the Board wanted to authorize the $500 payment to IRS for the Voluntary Correction Program, so that Attorney Jensen could include those two items in the pension plan that should have been included some years back. Attorney Jensen clarified the IRS Determination Letter fee was $1,000; this was an additional $500. Board Member Mayo asked for clarification of the use of the word "voluntary", which Chair Rhodes explained was the Village saying they knew there had been an error and they were going to correct it, and would not be fined a penalty, as opposed to the Village not doing anything and during the approval process the IRS finding the errors and assessing a penalty. Attorney Jensen explained the Emergency Meeting Minutes Board of Trustees of General Employees' Pension Trust Fund January 28, 2009 3 IRS could assess this plan up to $5,000 for non-voluntary issues found in the course of their audit. Pension Coordinator McWilliams expressed concern this was probably ten years worth of people looking at the plan and this not being picked up, and urged being more diligent in the future. Chair Rhodes indicated the Board must have assurance that the Village auditors were checking that the plan was in compliance. Attorney Jensen commented there was no requirement to file for the determination letter now; the IRS had indicated that next year they would send out surveys, and it was a gamble whether they would send one to the Village, and then require the determination letter. Pension Coordinator McWilliams noted the IRS at that point would not be as forgiving as now. Chair Rhodes expressed his opinion the filing should proceed, with the additional $500 paid for the voluntary correction program. Board Member Mangum agreed, stating the auditors should also be contacted to see if they were reviewing the pension plan for compliance, because auditing standards were changing every day. The scope of the Audit Committee was discussed; Pension Coordinator McWilliams clarified the resolution now only tasked the Audit Committee to go out for an RFP for the auditor. Chair Rhodes suggested a letter to the Village Council, to confirm the scope of the Village audit in regard to the pension plan, and what was done, then take it from there. Board Member Gload asked if responsibility was all being put upon the auditors to assure compliance. Attorney Jensen commented she would also be responsible-a couple of meetings ago she had presented to the Board changes to the Uniform Services Re-employment Rights Act, which would require the Board to make some amendments to their disability plan. The deadline to comply was September 30, 2011, to make those amendments and that was something she would bring forward to the Board. From time to time, other amendments would come up and she would have to make sure the time deadlines were met. Board Member Gload asked the correct procedure for the future-to do the amendments and then have the IRS review them, or have the IRS review them first. Attorney Jensen responded you could do it either way--the IRS could be asked to review the amendments before the amendments were made, so long as the amendments were made within the 5-year filing cycle allowed. Pension Emergency Meeting Minutes Board of Trustees of General Employees' Pension Trust Fund January 28, 2009 4 Coordinator McWilliams commented this could be placed on a future agenda so the board could decide which procedure they wanted to use. Attorney Jensen advised the next cycle would normally be 2014, but the IRS had inserted a special cycle, which was the 2010-2011 cycle. Since 1974 there had been six cycles, and since the one they were looking at now there had been the Pension Protection Act, then the Heart provision right on its heels, and they were coming out fast and furious, anytime they got an opportunity to add something. Attorney Jensen confirmed it was her role to notify the Board of those legislative changes, shared by the actuary and the auditor. The present problems had come up as a result of Attorney Jensen reviewing the plans going back in time; she had not done that before. MOTION: Board Member Mangum made a motion to approve payment of $500 to the IRS for the voluntary correction program. Board Member Gload seconded; motion carried by unanimous 4-0 vote. Pension Coordinator McWilliams suggested that at a future meeting, not at the upcoming February meeting, discussing the procedure to follow in case another situation arose where funds must be approved on an emergency basis, in the event that a quorum was not available. At present, if there had not been a quorum, the deadline for the $500 payment approve today would have been missed. Pension Coordinator McWilliams advised there would be a quorum for the February 2, 2009 meeting, but she, Board Member Mayo, and Board Member Gload would be at the pension trustee school, and the recording secretary would also not be able to attend. III. Adjournment There being no further business, upon motion by Board Member Mangum, seconded by Board Member Mayo, which carried by unanimous 4-0 vote, the meeting was adjourned. Respectfully submitted, Betty Laur Recording Secretary