Fillable Pilot Questionnaire for Governmental Plans Initiative Form 14035

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Pilot Questionnaire for Governmental Plans Initiative Form 14035

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Department of the Treasury — Internal Revenue Service
Pilot Questionnaire for
Governmental Plans Initiative
Form 14035
(February 2009)
OMB No. 1545-2071
Introduction
Pages 1 through 4 provide a background of the IRS Governmental Plans Initiative. Pages 5 through 24
include 65 questions to be completed by your Plan.
Overview of Governmental Retirement Plans
Over 20 million employees work for state and local governments. There are approximately 79,000 state and
local governments; 16,000 public educational employers; and 1,100 public health care institutions.
Governmental retirement plans are a common feature of the compensation packages provided to state and
local government employees. Since there is no federal filing requirement for these plans, the precise number
of governmental retirement plans is not known. Although defined benefit plans are most common, defined
contribution plans and so-called “hybrid plans” offered by state and local governments also play an important
role in overall retirement security for public employees.
We have limited experience with governmental plans. These plans have been the subject of a handful of
studies over the past few years. These include two Government Accountability Office (GAO) reports studying
various issues including participation, funding, actuarial assumptions, and investment returns; Governmental
Accounting Standards Board (GASB) projects currently studying accounting rules pertaining both to the
governmental employer and to the plan; and others such as the PEW report entitled “Promises with a Price –
Public Sector Retirement Benefits” which studied funding, financial reporting, and investment returns.
Role of IRS in Governmental Plans Oversight
Governmental plans are subject to several tax qualification requirements, including that the plan must operate
for the exclusive benefit of the plan’s employees (section 401(a)(2)), section 401(a)(17) and section 415
annual compensation and benefit limitations, section 401(a)(9) minimum distribution rules, rollover and plan
loan rules, and rules regarding the provision of retiree health benefits in a pension plan (section 401(h)).
Governmental plans are also required by federal tax law to have a written plan document that details how the
plan will operate and the benefits it will provide, to operate in accordance with the plan’s terms, and, when
applicable, to specify the actuarial assumptions to be used to define plan benefits in a way that precludes
employer discretion. These federal tax law requirements were enacted to protect the tax-deferred retirement
benefits of public sector employees. Failure to satisfy these requirements may disqualify the plan and result in
taxable events that would negatively impact the plan’s participants.
While a determination letter is not required in order for a governmental plan to be tax-qualified, upon voluntary
application, the IRS will make a determination of whether a retirement plan meets the qualification
requirements of the Code, including timely adoption of amendments to comply with applicable tax law
changes. Under Code section 401(b) and Revenue Procedure 2007-44, all section 401(a) governmental plans
are required to be amended to comply with applicable tax law changes (detailed in the 2007 Cumulative List,
published in Notice 2007-90) no later than January 31, 2009 (Cycle C); however, the IRS has recently
announced its intent to permit governmental plans to file for a determination letter in either Cycle C or Cycle E
(i.e., from February 1, 2010 to January 31, 2011). In the case of governmental plans, the IRS has also
modified the requirements for proof of compliance with prior law to only require that governmental plans show
compliance with the federal pension laws back to the amendments required by GUST. (See the
“Governmental Plans” webpage (www.irs.gov/ep) for a FAQ that discusses this situation.)
Form 14035 (Rev. 02-2009)
Page 1
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
Unlike private plans, governmental plans are not subject to several significant federal tax law requirements,
including minimum funding requirements, minimum participation and nondiscrimination standards, and many of
the post-ERISA minimum vesting standards. Thus, although there are many tax rules common to both
governmental and private plans, a complicated mix of similarities to and differences from private plan rules
poses difficult education and administration challenges for governmental plans and their participants.
Purpose and History of IRS Governmental Plans Initiative
Given the increasing size and importance of governmental plans, some argue these plans have not received
sufficient attention in the areas of education, guidance, voluntary programs, or overall compliance.
Accordingly, the IRS has established the Governmental Plans Initiative. This initiative will provide appropriate
education, outreach, and guidance for this important and highly diversified retirement plan segment, and will
promote voluntary compliance by such plans with applicable federal tax laws in hopes of ensuring the
protection of plan participants.
The IRS began developing the Governmental Plans Initiative in 2007. After extensive internal discussions and
study, including work to develop a draft compliance questionnaire, the IRS convened in April 2008 a
roundtable of IRS officials and participants representing approximately 40 governmental agencies. At that
time, the IRS announced its Governmental Plans Initiative and outlined the initiative’s education, outreach,
guidance and compliance goals. The roundtable’s topics included the IRS determination letter program,
federal tax law requirements relating to governmental plans, technical and compliance issues affecting such
plans, self-correction and voluntary compliance efforts, and guidance issues. The IRS also announced it was
developing a governmental plans questionnaire to be sent to a sample of governmental plans to study
compliance with applicable federal tax laws.
The dialogue that began with the April roundtable has been very productive. Some areas of concern raised by
external stakeholders include potential conflicts between federal law and state constitutional requirements; the
difficulty in amending plans when the legislative body meets infrequently; the difficulty in coming up with a
single plan document when applying for a determination letter or administering the plan’s provisions; the need
for an improved determination letter process and voluntary compliance program; the need for IRS personnel
trained in and dedicated to the special needs of governmental plans; the need for clear guidance; and the
need to address the particular challenges that small government employers face. Further, since the April
roundtable, the IRS has been working with stakeholders both to refine the content and scope of the draft
questionnaire and the overall initiative. This has led to a new IRS web page that specifically addresses
governmental plan issues and concerns (http://www.irs.gov/ep). This dedicated web page, which is updated
regularly, contains links to relevant IRS guidance, the April roundtable materials, and FAQs that address
questions posed over the past several months.
Form 14035 (Rev. 02-2009)
Page 2
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
Highlights of Pilot Questionnaire
This pilot questionnaire is an important step in a broader approach to educate the IRS, governmental plan
sponsors and administrators, and the public about critical tax compliance and tax administration issues and
concerns, and enhance the IRS’ current voluntary compliance programs. The pilot questionnaire focuses on
the following areas:
1. demographic information;
2. plan documents, including interaction with the IRS on determination and voluntary compliance matters;
3. plan provisions;
4. plan operations;
5. plan communications;
6. plan administration;
7. retirement systems; and
8. general questions and opportunities for the respondent to provide feedback and additional information.
The pilot questionnaire has been developed to consider certain areas within the oversight responsibilities of
the IRS.
Next Steps – Release of Pilot Questionnaire and Beyond
This pilot questionnaire has been developed along the lines of others that TEGE has developed in recent
years. IRS technical specialists with significant experience and expertise in governmental plan guidance,
compliance, and education and outreach have prepared the questionnaire to address those areas the IRS has
determined warrant its attention at this time. The feedback from the pilot questionnaire will be used to develop
the final questionnaire to be distributed later in 2009. Ultimately, the IRS will issue a public report that
summarizes the overall responses, findings, and observations based on those responses, including actions in
the areas of guidance, education/outreach, determinations, and compliance. Publicly issued reports will not
include taxpayer names or identifying information, nor will we use the pilot data to select anyone for
examination.
Form 14035 (Rev. 02-2009)
Page 3
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
The planned next steps include:
1. This pilot questionnaire is being sent to a group of 25 governmental plans selected at random. The
purpose of the pilot is to test whether the questions are clear, understandable, and capable of being
answered without undue burden. In connection with the mailing, the IRS is posting the pilot
questionnaire on its website and soliciting comment from other plans, governmental employers,
practitioners, and the general public.
2. Early 2009: Issue an Advanced Notice of Proposed Rulemaking regarding the definition of
governmental plan, accompanied by a series of town hall meetings to consider the proposed guidance.
IRS has announced a one-time modification to the staggered remedial amendment program that would
allow governmental plans to choose to file by the end of Cycle C (January 31, 2009) or by the end of
Cycle E (January 31, 2011).
3. Spring 2009: Compile information from the pilot’s responses to consider modifying the questionnaire to
address appropriate clarity, content and burden concerns that might be raised by the pilot respondents
or by public comments.
4. Mid 2009: Mail out the final questionnaire, allowing responders a 90-day response period.
5. Late 2009: Compile and analyze the questionnaire’s responses and issue a public report on the study
that may be used to develop future compliance tools, guidance and education efforts.
6. Ongoing and indefinitely: Work with governmental plan sponsors, administrators, and practitioners to
improve the plan determination letter process, provide clear guidance in appropriate areas, and
enhance self-correction and voluntary compliance procedures and opportunities for governmental
plans.
The questions to be answered by your Plan begin on the following page. A response to a question may be
supplemented by attaching a copy of specific information relevant to the particular question contained in a
statute, regulation, policy, resolution, collective bargaining agreement, other pertinent documentation, or by link
to a specific page on a website that contains the supplemental information.
Plan v. System. If the questionnaire is received by a single or multi-employer plan, it is to be completed
based on the data and plan provisions applicable to that particular plan. Some questionnaires may be
received by retirement plan systems that include multiple employers with varying plans or varying plan
provisions. In this case, the questionnaire is to be completed based on the data and plan provisions that apply
to the employer with the largest number of participants within the retirement system.
Numerous questions throughout the questionnaire refer to “Plan” within the question. If it is not possible to
answer the question for the “Plan,” please leave the response blank and indicate in question 62 that you were
unable to respond. A limited number of questions ask for a response based on either Plan or System
information; please answer those questions accordingly. While, except as otherwise indicated, the
questionnaire should not be completed on the basis of system-wide data, individual plans should feel free to
seek assistance of their system in completing the questionnaire. Any questions that arise relating to receipt of
the questionnaire by a retirement plan system should be addressed to the IRS representative listed in the
cover letter.
Form 14035 (Rev. 02-2009)
Page 4
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
Pilot Questionnaire for Governmental Plans Initiative
ALERT FOR RESPONDERS USING CDs
Saving your work while completing the questionnaire
It is imperative to save your work before closing the questionnaire or all your work will be lost. To save, either
click on the “Save” icon or go to the “File” menu and click “Save.” This will save the work you have completed
to that point. You can open the file at a later time to continue your work. It is also important to frequently
save your work while completing the questionnaire.
PART 1 - DEMOGRAPHIC INFORMATION
This section requests general information relating to tax-qualified retirement plans adopted
for governmental employees as well as plan population characteristics. This information will
assist us in understanding the basic structures of the plans adopted by governmental entities
and who participates in these plans.
1. Name of Plan:
2. Plan EIN:
3. Is the Plan intended to be a qualified retirement plan established under Internal Revenue Code (Code)
section 401(a)?
Yes No
If you responded “No,” do not complete any further questions and return the questionnaire to the address
noted on the cover letter.
If you responded “Yes,” proceed.
4. Is the Plan intended to be a governmental plan as defined in Code section 414(d)?
Yes
If you responded “No,” do not complete any further questions and return the questionnaire to the address
noted on the cover letter.
If you responded “Yes,” proceed.
5. a. Number of Active Participants (not in Benefit Pay Status)
b. Number of Payees in Benefit Pay Status
i. Non-disability related retired participants
ii. Disability related retired participants
c. Number of Unpaid Terminated Deferred Vested (not in Benefit Pay status)
d. Number of Other (please describe below):
Total Number of Participants (total of lines a. - d.):
Form 14035 (Rev. 02-2009)
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Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
6.
7.
8.
Indicate the type of plan:
Defined Contribution Defined Benefit Hybrid Defined Benefit
A defined contribution plan is a plan that allocates all employer and employee contributions to separate
participant accounts and the ultimate benefit a participant receives is based upon that account balance. A
defined benefit plan provides for the payment of definitely determinable benefits for employees or their
beneficiaries over a period of years, usually for life, after retirement based on a specific formula in the plan.
A hybrid plan refers to a type of defined benefit plan that has attributes of both a defined benefit and a
defined contribution plan. For purposes of this questionnaire, the term hybrid plan means a plan under
which normal and early retirement benefits are primarily based on a hypothetical account balance and
credited interest.
The Internal Revenue Service (IRS), Department of Labor (DOL), and the Pension Benefit Guaranty
Corporation (PBGC) have issued rulings on whether a plan or system is a "governmental plan" (i.e.,
whether the plan is sponsored by an organization which may sponsor a governmental plan). These rulings
should be distinguished from a "determination letter" which is the subject of question 15. A determination
letter is available to any qualified plan, whether or not characterized as a "governmental plan" and relates
solely to whether that plan satisfies the applicable tax-qualification requirements. The following questions
relate solely to rulings on whether your Plan or System is a governmental plan.
Has your Plan or System ever received (check all that apply and show the date of the letter):
A letter ruling issued by the IRS that it is a governmental plan under section 414(d) of the Code;
Date (Use mm/dd/yyyy)
An advisory opinion issued by DOL that it is a governmental plan under section 3(32) of ERISA;
Date (Use mm/dd/yyyy)
An administrative determination or opinion letter issued by the PBGC that it is a governmental plan
under section 4021(b) of ERISA
Date (Use mm/dd/yyyy)
If your Plan or System has received such a letter, did the letter apply to the:
Plan System
Give the following information about the employers that participate in the Plan:
Are the employers that participate in the Plan:
a. State employers only
Local employers only
Both state and local employers
Other
(please explain):
b. Attach a list of the employers that participate in the Plan.
Form 14035 (Rev. 02-2009)
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Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
9.
Check the types/categories of employees eligible to participate in the Plan.
Types (check all that apply):
Full-time
Part-time
Hourly
Salary
Seasonal
Categories (check all that apply):
General
Public Safety
K-12 Teachers
University
(Teaching/Non-Teaching)
Non-teaching School Employees
Judges
Legislators
Legislative staff
Other
(please specify):
10.
Are any types/categories of employees specifically excluded from participation in the Plan?
Yes No
If "Yes," please describe the types and categories of employees specifically excluded from
participation in the Plan.
11.
How are Plan or System assets held? (check all that apply)
Trust. If the box is checked, is the trust for the exclusive benefit of participants and not subject to
reversion prior to termination?
Yes No
Annuity contract
Insurance other than annuity contract
Other
(please specify):
Does your answer apply to the:
Plan System
Form 14035 (Rev. 02-2009)
Page 7
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
No
Unknown
Pilot Questionnaire for Governmental Plans Initiative
12.
Who has authority to amend/change the terms of the Plan? (check all that apply)
State Legislature
Local/ County government legislative body
Board of Trustees of the Plan
Executive Branch of State or local government
Employers/Members via Referendum
Other
(please specify):
13.
Are there legal considerations that might prevent the party described in question 12 from being able to
amend the Plan on at least an annual basis?
Yes
If you responded “Yes,” describe below.
14.
Financial statements
a. Are financial statements of the Plan or System prepared?
Yes No
b. If you responded “Yes” to a., are financial statements prepared for the:
Plan System
c. If you responded “Yes” to a., are the financial statements audited?
Yes
PART 2 - PLAN DOCUMENT INFORMATION
This section requests information on the form of the documents used to administer the Plan
and whether the Plan has ever requested a determination letter or used any of the IRS
compliance programs available to tax-qualified retirement plans. This information will assist
our understanding of the unique structure of governmental plan documents and will assist us
in determining whether we need to do further outreach to heighten the governmental plan
community’s awareness of the various compliance programs currently available to them.
15.
Has the Plan or System ever received an IRS determination letter? (See Question 7 for the distinction
between a “determination letter” and a letter ruling on the status of the Plan or System as a “governmental
plan”)
Yes No
If you responded “Yes,” was the determination letter received by the:
Plan System
If you responded “Yes,” indicate the date of the most recent IRS determination letter (located in the top
right corner of the determination letter).
Date (Use mm/dd/yyyy)
Form 14035 (Rev. 02-2009)
Page 8
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
Pilot Questionnaire for Governmental Plans Initiative
16.
The IRS recognizes that governmental plans may not have a single plan document, but the plan may
consist of documents from various sources.
(See the “Governmental Plans” webpage (www.irs.gov/ep) for a
FAQ that discusses this situation.)
Do you have a single, written plan document containing all the provisions of a section 401(a) plan (to the
extent applicable to governmental plans)?
Yes
If you responded “Yes,” proceed to Part 3: Plan Provisions.
If you responded “No,” answer Question 17.
17. Check all the boxes below that contain the provisions of the Plan.
Statutes
Rules
Regulations
Policies
Resolutions
Ordinances
Collective Bargaining Agreements
Other (please specify below):
PART 3: PLAN PROVISIONS
Even though governmental plans are not subject to all of the tax-qualification requirements
that apply to private sector plans, governmental plans are required to comply with certain of
the requirements, such as provisions relating to eligibility to participate, vesting of benefits,
and the types of benefits offered by plans. Because tax-qualified retirement plans are
required to comply with certain Code provisions and the terms of their plans, the following set
of questions is intended to obtain information concerning common types of plan provisions
which will help the IRS in assessing the need to develop further tools and guidance for the
governmental plan community.
Please provide a short description of the Plan provisions requested below.
18.
What are the Plan’s age and service requirements for eligibility?
Form 14035 (Rev. 02-2009)
Page 9
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
19.
If the term “year of service” is used by the Plan to determine a. eligibility; b. vesting; or c. benefit accruals or
allocations, describe how “year of service” is defined or determined for each of these categories.
a. Eligibility to participate
b. Vesting (if applicable)
c. Benefit accruals or allocations
20. Check any non-retirement type benefits authorized by the terms of the Plan (check all that apply):
Lump Sum Death Benefit
Long Term Disability
Retiree Health
Life Insurance
Other
(please specify below):
Form 14035 (Rev. 02-2009)
Page 10
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
Pilot Questionnaire for Governmental Plans Initiative
21.
Some governmental entities use a Deferred Retirement Option Plan (DROP) as a means to encourage
older employees to continue working instead of receiving a retirement benefit when first eligible under the
terms of the Plan. DROP features are permitted in plans if they meet the applicable requirements under
the federal pension law. While there is no typical DROP plan, under some arrangements, an employee
who chooses to continue working after he or she is eligible to retire has a special account (real or
hypothetical) set up which is credited with either additional accruals or allocations during the period of
continued employment (which is generally limited to a specific period of time). The additional accruals or
allocations (plus earnings) are paid to the participant when he/she retires. This payment is in addition to
any other retirement benefits to which the participant is entitled.
Plans may also offer enhanced “window” benefits to encourage employees to retire. A ”window” program
generally is a permitted program where participants are offered an enhanced benefit under the plan if the
participant retires during a limited period of time (i.e., the “window period”) set by the plan.
We are interested in the extent to which DROP or window features are used by governmental entities to
manage their workforce.
a. Do the terms of the Plan provide for a DROP?
Yes
b. If you responded “Yes,” check which of the following elements are included (check all that apply):
Employer Contributions go into a DROP account
Employee Contributions go into a DROP account
Pension Benefit goes into a DROP account
Fixed guaranteed rate of return on the DROP account
Rate of return on account is based on assumed or real plan investment return
Rate of return on account is based on member directed investments
Rate of return is based on other factors
Other
(please specify below):
22.
In the last five (5) years, have amendments been adopted to provide any special “window” programs (in
addition to the Plan’s regular early retirement provisions) that encourage early retirement?
Yes No
If you responded “Yes,” describe how the most recent program operates:
Form 14035 (Rev. 02-2009)
Page 11
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
23.
Are mandatory employee contributions required under the terms of the Plan?
Yes No
24.
Pick-up contributions are those contributions designated as employee contributions but where the
governmental entity “picks up” the contributions and treats them as employer contributions.
a. Does the Plan treat mandatory employee contributions as pre-tax “pick-up” contributions under Code
section 414(h)?
Yes No
b. If "Yes," does the Plan or System have a private letter ruling on the “pick-up”?
Yes No
c. If you responded “Yes,” to a. how are pick-up contributions made or determined?
Plan Terms
Formal Action taken by duly authorized person
Collective bargaining agreement
Employer discretion
Other
(please specify):
25.
Do the terms of the Plan allow participants to make voluntary employee contributions to the Plan?
Yes No
Question 26 applies only to defined contribution plans. If the Plan is a hybrid or defined benefit plan, skip to
Question 27.
26.
a. Does the governmental employer make contributions on behalf of employees?
Yes No
If you responded “Yes,” answer b. and c. below.
If you responded “No,” proceed to Question 31.
b. What kind of contributions are made by the governmental employer on behalf of employees?
Flat dollar amount
Matching contributions
Percentage of payroll
Other
(please specify):
c. How are contributions credited or allocated to participants’ accounts? (e.g., a percentage of an
employee’s compensation)
Form 14035 (Rev. 02-2009)
Page 12
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Years of Service:
Pilot Questionnaire for Governmental Plans Initiative
Questions 27 through 30 apply only to defined benefit (including hybrid) plans. If the Plan is a defined
contribution plan, skip to Question 31.
27.
Describe the following benefits (if applicable) that are provided under the terms of the Plan:
a. Normal Retirement:
i. What is the basic benefit formula for a normal (unreduced) retirement (e.g., 2% of the highest
average salary for each year of service credit)?
ii. What are the conditions that must be met in order to receive such a benefit?
Age:
Other (
please specify below):
b. Early Retirement:
i. What is the basic benefit formula used for early retirement (e.g., 1% of the highest average salary for
each year of service credit)?
What are the conditions that must be met in order to receive such a benefit? ii.
Age: Years of Service:
Other (
please specify below):
Form 14035 (Rev. 02-2009)
Page 13
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
c. Deferred Vested Retirement:
i. For members who terminate employment before retirement, what is the benefit formula used?
ii. What are the conditions that must be met in order to receive such a benefit?
Age: Years of Service:
Other (
please specify below):
d. General Disability:
i. What is the basic benefit formula used?
ii. What are the conditions that must be met in order to receive such a benefit?
e. Service-Related Disability:
i. What is the basic benefit formula used?
Form 14035 (Rev. 02-2009)
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Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Ad-Hoc
Pilot Questionnaire for Governmental Plans Initiative
ii. What are the conditions that must be met in order to receive such a benefit?
f. Survivor Benefits:
i. What is the basic benefit formula used?
ii. What are the conditions that must be met in order to receive such a benefit?
g. Lump Sum Death Benefits:
i. What is the basic benefit formula used?
ii. What are the conditions that must be met in order to receive such a benefit?
28.
Does the Plan provide for post-retirement benefit adjustments such as an automatic cost-of-living
adjustment (COLA) to retired Plan participants?
Yes No
29.
If you answered “Yes,” to question 28, is it:
Guaranteed
Form 14035 (Rev. 02-2009)
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Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
30.
Do the terms of the Plan permit Plan participants to purchase additional service in order to increase their
benefits under the Plan (i.e., does the Plan allow a participant to purchase service that was not originally
covered by the terms of the Plan, such as military service or other non-covered employment)?
Yes No
If you responded “No,” proceed to Question 31.
If you responded “Yes,” answer a. and b. below:
a. Describe the Plan’s provisions for purchasing additional service including any eligibility criteria and
conditions that apply to purchasing additional service.
b. If the purchase is permitted to be paid in something other than cash, describe the means allowed to
purchase the additional service (such as use of sick or personal leave to purchase the service).
31.
The funding requirements contained in sections 412 and 430 of the Code applicable to private employer
plans do not apply to governmental plans. However, some governmental plans may be subject to funding
or contribution requirements set forth in applicable state or local law or elsewhere in a plan document.
Does your applicable state or local law or other Plan document provide funding requirements?
Yes No
If ”Yes,” describe the Plan terms, if any, that relate to funding any required or voluntary contributions to be
made by the employer or employees under the terms of the Plan, including applicable state or local law.
For example, describe any Plan terms that provide the period during or time by which required employer
contributions must be made by the employer to the Plan.
Form 14035 (Rev. 02-2009)
Page 16
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
PART 4 - PLAN OPERATION
Governmental plans that intend to be qualified under Code section 401(a) must satisfy a
number of statutory and regulatory requirements and must operate in accordance with the
terms of their plans. This section sets forth a summary of various requirements and requests
information concerning the satisfaction of those requirements.
32.
Code section 401(a)(9) requires that a minimum distribution be made to a participant by April 1 of the
calendar year following the calendar year in which the participant attains age 70½; or if later, the calendar
year in which the participant retires.
Describe the policies and procedures that the Plan uses to identify terminated Plan participants who are
required to receive a required minimum distribution.
33.
Code section 401(a)(17) provides an annual limit on the amount of compensation that can be taken into
account to determine participants’ benefits.
Describe the policies and procedures that the Plan uses to track and limit participants’ compensation in
this regard.
34.
Code section 401(a)(31) provides that a participant has the right to make a direct trustee-to-trustee transfer
of an eligible rollover distribution (such as a lump sum distribution or a refund of employee contributions).
Note: each participant should receive a notice under Code section 402(f) (See Notice 2002-3).
Describe the policies and procedures that the Plan uses to notify participants who are to receive an eligible
rollover distribution that they have the right to a direct rollover.
Form 14035 (Rev. 02-2009)
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Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
35.
Code section 415 limits the maximum amount of a participant’s accrued benefit or the annual contribution
amount that can be allowed into a participant account.
Describe the policies and procedures that the Plan uses to track and limit benefits and contributions. If
applicable, the description should include the impact of benefits provided under DROPs (see Question 21)
and/or COLAs (see Question 28), if applicable.
36.
Code section 415(n) allows a governmental plan to provide a participant with the opportunity to purchase
permissive service credit. Permissive service credit means credit for a period of service recognized by the
governmental plan which the participant has not received under the plan and which the employee receives
if the employee makes a voluntary contribution to the plan. The voluntary contribution is in addition to the
regular employee contributions, if any, under the plan and must not exceed the amount necessary to fund
the benefit attributable to the period of service.
If the Plan provides for the purchase of service pursuant to Code section 415(n), describe the policies and
procedures that the Plan uses to calculate the amount of the required contribution and to limit the purchase
of such credits to the types and levels provided for in the statute.
37.
Does the Plan or System have policies and procedures that it uses to review its operation to determine that
it is operated in accordance with its Plan terms and applicable Federal statutory requirements.
Yes No
If “Yes,” do they apply to the:
Plan System
If “Yes,” (check all that apply):
Statute
Regulations
Policies
Procedures
Internal Audit
External Audit
Executive Audit
Legislative Committee Oversight
(Question continued on next page)
Form 14035 (Rev. 02-2009)
Page 18
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
(Question 37 continued)
Board Oversight
Other
(please specify below):
38.
Is there an individual or entity assigned responsibility for ensuring the Plan’s or System’s compliance with
the provisions of the Internal Revenue Code?
Yes No
If “Yes,” is that individual/entity responsible for the:
Plan System
39.
The IRS Employee Plans Compliance Resolution System (EPCRS) allows plan sponsors to correct
problems that involve defective plan documents and/or a failure to operate the plan in accordance with its
terms. The system is currently described in Revenue Procedure 2008-50 (enclosed) and two of its three
component programs are voluntary in nature. These voluntary programs are the Self-Correction Program
(SCP) and the Voluntary Compliance Program with Service Approval (VCP).
a. Is the Plan administrator aware of the EPCRS program?
Yes No
b. Is the Plan administrator aware of the two voluntary compliance programs (SCP and VCP) that can be
used to correct various qualification problems involving the Plan?
Yes No
c. Would any of the following changes to the voluntary compliance program be helpful (check all that
apply):
Significantly lower penalties for nonsubstantive technical errors
Allow self-correction for certain minor errors
Other
(please specify):
d. If you responded “No,” to a. or b., describe the actions that the Service could take to better inform you
of EPCRS in general as well as the requirements and benefits of the SCP and VCP programs.
Form 14035 (Rev. 02-2009)
Page 19
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
PART 5 - PLAN COMMUNICATIONS
This section requests information concerning how participants learn about their retirement
benefits and what information is provided to them concerning those benefits.
40. How are Plan provisions communicated to participants? (check all that apply)
Plan Document
Summary of Plan Provisions
Member Handbook
Website
Newsletters
Group Meetings
Other
(please specify):
41. When are Plan provisions communicated to participants? (check all that apply)
When hired
Annually
At first eligibility for retirement
At retirement
When the Plan is amended
Other
(please specify):
42. Describe additional information provided to participants to communicate Plan terms or information related
to plan administration.
43. Is the communication described in question 41 above provided to Plan participants who are not active or
eligible employees (e.g., retirees, surviving spouses)?
Yes No
If "Yes," how is this information provided?
Form 14035 (Rev. 02-2009)
Page 20
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
No
No
Pilot Questionnaire for Governmental Plans Initiative
44. Are former employees who are eligible for retirement benefits contacted at the time they reach benefit
eligibility?
Yes No
45. Is there communication with employers whose employees participate in the Plan about Plan amendments
or changes in policies or procedures that affect Plan administration?
Yes No
46. Is any Plan financial information communicated to participants?
Yes
If you responded “Yes,” what form is the communication?
Comprehensive Annual Financial
Report Summary of Financial Statements
Audited Financial Statements
Other (please specify):
PART 6 - PLAN ADMINISTRATION
This section relates to the administration of the Plan and the internal controls and procedures
used by the Plan. Among other things, we are interested in how governmental plan assets are
administered with respect to the exclusive benefit rule (section 401(a)(2)). Under the Code,
the exclusive benefit rule requires that, except for the payment of plan expenses, plan assets
must be used for the exclusive benefit of participants.
47. Is there a Board of Trustees authorized to administer the Plan (e.g., hire third party administrators and
investment advisors, make investment decisions, etc.)?
Yes No
If you responded “No,” who has authority to administer the Plan?
48. Is a third-party administrator used to administer the Plan?
Yes
49. Who makes investment decisions for the Plan?
50. Are third-party investment advisors used for the investment of Plan assets?
Yes
Form 14035 (Rev. 02-2009)
Page 21
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
Pilot Questionnaire for Governmental Plans Initiative
51. Are periodic compliance reviews/audits of the Plan conducted?
Yes
If "Yes," describe the process and general scope of any such reviews or audits.
52. Describe what actions are taken to ensure that the Plan’s assets are protected to ensure their use for the
exclusive benefit of the employees. For example, do Plan documents include the express requirement
that Plan assets are to be used for the exclusive benefit of the participants?
53. Is the Plan subject to a policy or procedure that relates to conflicts of interests?
Yes No
If you responded “Yes,” does the policy or procedure apply to conflicts involving (check all that apply):
Governing Body
Administrative Staff
Third party professionals
Others
(please specify):
PART 7 - GENERAL QUESTIONS
54. The IRS annually publishes a cumulative list of required plan changes and also has a website that details
interim and discretionary amendments. Are you aware of this information?
Yes No
55. What other steps could the IRS take to give you tools, education or guidance to assure that the terms of
the Plan conform to all applicable requirements of the Code?
Form 14035 (Rev. 02-2009)
Page 22
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
No
Pilot Questionnaire for Governmental Plans Initiative
56. What issues does the Plan face when complying with the requirements of the Code? We are particularly
interested in any unique or special problems that governmental plans may have to address that private
employers may not face? (check all that apply)
Conflicts with state/local property rights/benefit guarantees, or collective bargaining agreements
Incompatible time frames (legislative sessions, etc.)
Rules, regulations and definitions better suited to ERISA plans
Nomenclature inapplicable to governmental plan setting
Missing or inadequate guidance relevant to unique governmental plan structures or special problems
Others
(please specify below):
57. Describe any additional information you would like to provide to supplement any of your responses to an
earlier question(s). Please clearly indicate the question(s) to which the information relates.
PART 8 - RETIREMENT SYSTEMS
58. Are you a governmental employer that participates in a state or local retirement system?
Yes
If “Yes,” answer questions 59-62. If “No,” skip to question 63.
59. How many governmental employers participate in the retirement system? Attach a list of those employers.
60. How many participants participate in the retirement system?
61. Briefly describe how your System is organized and operated.
Form 14035 (Rev. 02-2009)
Page 23
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
Pilot Questionnaire for Governmental Plans Initiative
62. Are there questions in this questionnaire that you were unable to answer because you are part of a
retirement system?
Yes No
If “Yes,” identify the specific questions and describe how the questions should be modified to address
these difficulties?
PART 9 - FEEDBACK
63. On a scale from 1 to 5, with 5 being the most burdensome, how burdensome was this questionnaire to
complete?
1 2 3 4 5
Not at all burdensome . . . . . . . . . . . . . . . . . . . Very burdensome
64. Estimate how long it took you complete this questionnaire (include the time of all individuals who
participated)?
hours
65. Explain any additional information you would like to share related to the questionnaire in general or any
specific question.
Contact information for person responsible for completing this questionnaire
Name
Phone Email
Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal
Revenue laws of the United States. We need it to ensure that you are complying with these laws.
The IRS may not conduct or sponsor data gathering efforts, and you are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or
records relating to a collection of information must be retained as long as the contents may become material in the
administration of any Internal Revenue law. Generally, tax returns and tax return information are confidential, as required
by 26 USC 6103.
Form 14035 (Rev. 02-2009)
Page 24
Catalog Number 52098A
Department of the Treasury - Internal Revenue Service
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