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Employee Plans Compliance Unit (EPCU) - Completed Projects - Project with Summary Reports – Government Questionnaire Project

Government Questionnaire Project Summary

The Employee Plans Compliance Unit (EPCU) Government Questionnaire project was designed to help Employee Plans (EP) develop further tools and guidance to assist governmental plan sponsors. The goal of this phase of the project was to obtain information about plans sponsored by governmental entities, and then identify similarities, common answers, and trends based on answers to a questionnaire. Beginning in February 2009, compliance contact letters were sent to a sample of governmental plan sponsors for an initial preview of the questionnaire.


The Pilot Questionnaire for Governmental Plans Initiative (Form 14035) focused on obtaining basic information from governmental entities about the structure of their Internal Revenue Code (Code) section 401(a) retirement plan. The results are summarized below.

Response Results

Part 1 – Demographic Information

Each governmental entity provided a plan name, employer identification number (EIN), and confirmed they were a governmental entity. There was great variability on the categories of employees eligible to participate in the plan, with most entities excluding seasonal, part-time or temporary employees. All plans were defined benefit plans with some special plans limited to a specific population such as elected officials, police or fire fighters.

Part 2 – Plan Document Information

Some governmental entities indicated they either had or currently have applied for a determination letter under Cycle C. Over 1,500 governmental entities applied for determination letters under Cycle C. A few governmental entities responded that their plan was comprised of a single written document while the others indicated their plan documents were spread among statutes, rules, regulations, policies, procedures, and collective bargaining agreements; making it more difficult to keep track of the actual written plan.

Part 3 – Plan Provisions

Eligibility for membership in the plan was typically immediate upon hire, along with a vesting requirement. Eligibility for benefit commencement was achieved by reaching normal retirement age. No governmental entities that responded indicated they had amended the plan within the last five years to provide a special ‘window’ program. A few provided disability and lump sum options.

Most plans required mandatory employee contributions and some permitted additional voluntary contributions, although participants did not appear to take advantage of that opportunity. Many plans were Code Section 414(h) pick-ups and most entities indicated they did not make any additional contributions beyond the pick-up. Mostly all plans contained cost of living adjustments (COLAs) that were guaranteed. Some plans contained purchase of service provisions (Code section 414(n)), particularly for veterans. One important finding was that most governmental plans had some type of funding requirement, although different than the funding requirements contained in Code sections 412 and 430, which do not apply to governmental entities.

Part 4 – Plan Operation

These questions highlighted some typical differences between private employers and governmental entities.  Some governmental entities indicated that their salary structure prohibited salaries greater than a certain dollar amount. Therefore, the issues of exceeding compensation or benefits limits under Code Sections 401(a)(17) and 415 were inapplicable. However, other entities indicated they had computer systems that tracked retirement ages or had consultants that monitored plan provisions. Many indicated that the IRS Model Notice on rollovers was included as part of their retirement package. All government entities indicated that they have a policy, procedure, or system in place to review their operations to ensure compliance with Code requirements, most with Board of Trustees oversight.

Another important finding was that over 75% of the governmental entities that responded indicated they were aware of the EP correction program (EPCRS), but 35% indicated they were not aware of the EPCRS website.

Part 5 - Plan Communications

Responses showed that governmental entities avail themselves of the same methods of communication with their employees that private employers use, such as websites, handbooks, newsletters, and meetings. No one single method stood out more than any other. Contact with employees occurred during similar event points as private employers, including status update, hire, termination, amendment, retirement, death and request for benefit calculations. All plans communicated with participants at hire and retirement, with almost 60% indicating annual communication with their participants. Communication was mostly with active participants covering relevant plan provisions and operations including eligibility, benefits, amendments, and financial reports.

Part 6 – Plan Administration

All governmental entities that responded said they used a Board of Trustees to govern the plan, with in-house administration. All entities used third party consultants/advisors particularly for investment of plan assets. Periodic compliance reviews and audits were conducted, mostly because of State mandates. All entities responded that they had a conflict of interest policy in place.

Part 7 – General Questions

Most governmental entities that responded said they were aware of the EP portion of the IRS website, Some governmental entities wanted IRS to provide educational classes at their direct level rather than at the State level.

Part 8 – Retirement Systems

Some governmental employers responded that they did not know which other governmental employers participated in the retirement system.

Part 9 – Feedback

This section provided government entities with an opportunity to rate the time commitment for completing the questionnaire, as well as any additional information they wanted to provide. Great variability existed on the issue of self-rating burden, with the open ended question mainly used as a continuation space for previous answers.

Customer Education and Outreach

This project established that EP can be effective in assisting governmental entities with compliance through tools focused on identified issues and trends and that our services are wanted.

Page Last Reviewed or Updated: 30-Jan-2017