At the recent IRS Pension Liaison meeting in Washington, D.C., Michael J. Sanders, Acting Mid-Atlantic EP Area Manager, gave this interesting statistic:
1 out of 5 employees in the U.S. are employed by government entities, and governmental plans hold $3.5 trillion in funded pension plan assets.
He went on to say that, in spite of this statistic, government plans in the past have never received much attention from the IRS on a compliance basis. That is all changing, according to Mr. Sanders. In the past year or so the Employee Plans Compliance Unit of the IRS has sent out letters to governmental entities with a questionnaire designed to provide information to the IRS as to how governmental plans are doing in the area of Internal Revenue Code compliance. The questionnaire is targeting the following areas:
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Demographics
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Plan documents
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Plan operations
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Plan communications
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Plan administration
Mr. Sanders went on to note that many of the questionnaires sent out had a response date of May 19th and that the IRS is in the process of evaluating the information provided and will soon be sending out questionnaires to additional governmental entities for input.
Please note a couple of the questions being asked:
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"Is there an individual or entity assigned responsibility for ensuring the Plan's or System's compliance with provisions of the Internal Revenue Code?"
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"Are periodic compliance reviews/audits of the Plan conducted?"
Obviously, both questions are aimed at discerning whether governmental plans are "getting with the program."
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