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HomeMy WebLinkAboutMinutes_Pension General_01/28/2009TEQUESTA 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. II. 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 detemtiination 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, Attorney 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 fle 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 31, 1995, for example, to make a certain change_i{ was just not done by the IRS Emergency Meeting Minutes Board of Trustees of General Employees' Pension Trust Eund January 2~, 2009 2 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 23, 2009 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 ale 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. Attomey 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 Joint Meeting Minutes of Board of Trustees of Public Safety Officers' Pension Trust Fund and General Employees' Pension Trust Fund February 24, 2009 4 Board Member Nielson stated he did not know what Attorney Jensen used for her basis or if it was just her opinion, and it was his understanding some things were bargained into the contract. Board Member Gload advised the career services benefit was in the new PBA contract. Pension Coordinator McWilliams recalled that Attorney Jensen had advised it was the Board's responsibility to interpret total cash remuneration, which the Board did in 2008, and in doing so had interpreted that these items should or should not be considered total cash remuneration. The career service benefit had been included; it had just not been placed into the table. The actuary or Attorney Jensen could still provide comparisons, if that was what the Board wanted. Board Member Nielson requested the comparison be done. Pension Coordinator McWilliams clarified for the Board that right now, the items listed in the chart were considered pensionable pay because those had been approved. Pension Coordinator McWilliams commented if the Board wanted to table this item, she could bring the comparison to the May meeting. MOTION: Secretary Cooper made a motion to table the total cash remuneration determination to the May 2009 meeting. Board Member Nielson seconded the motion, which carried by unanimous 3-0 vote. V. Adjournment There being no further business, upon motion by Secretary Cooper, seconded by Secretary Hansen, the meeting was adjourned. Respectfully submitted, ,~ a ~-~ Betty Laur Recording Secretary