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Ask the Experts August 9, 2016
(b)lines Ask the Experts – Are Governmental Plans Free From ERISA-Like Regulations?
“I was surprised to learn in your recent Ask the Experts column that governmental plans are always exempt from the rules of the Employee Retirement Income Security Act (ERISA).
Reported by PS
“To me, ERISA is an important regulatory framework for corporate and other plan sponsors to follow that mandates that such sponsors be prudent in administering such plans. Are governmental plans free from ERISA-like prudence requirements?”
Michael A. Webb, vice president, Cammack Retirement Group, answers:
Interesting question! Just because governmental plans are not subject to ERISA that does not mean they lack regulation that provides ERISA-like requirements. Governmental plans are subject to both the Internal Revenue Code as well as applicable state laws. Given that ERISA was derived from the state law of trusts, many of these state laws have provisions that mirror (or, coming full circle, adopt parts of) ERISA. In addition, some governmental plans have decided to follow at least some ERISA-like practices, as indicated in a 2014 Ask the Experts column about the subject.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
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