WASHINGTON — The IRS is ready to get better acquainted with public pension funds, and that makes fund executives nervous.
The Internal Revenue Service plans to survey a test group of 25 public plans in September or October, with a follow-up survey going out to about 200 systems in the second or third quarter of 2009, said Michael Julianelle, director of employee plans at the IRS. Agency officials have not yet identified which pension funds will receive the questionnaire.
A draft questionnaire shared with public pension representatives in April asked for details about the composition of boards of trustees, funding levels and benefit accruals. Mr. Julianelle said the survey has been modified in response to comments, but declined to provide a copy of the revised questionnaire.
Public pension fund officials are concerned about the scope of the survey, claiming the IRS is overstepping its bounds and venturing into territory that does not fall under federal purview. Observers fear the review could ultimately lead to audits and increased regulation of public pension funds.
“Our plan runs on state law — not regulation, law,” said Alan Winkle, executive director of the $11.5 billion Idaho Public Employee Retirement System, Boise. “There'd be constitutional issues, there'd be states' rights issues. ... It could have more far-reaching implications” than it seems, he said of the potential for increased federal regulation.”
From the IRS' view, however, the “ultimate goal is to find out if there are any issues that we need to be involved in,” said Mr. Julianelle.
The public pension fund community has been “historically underserved,” and “we don't know enough about them to draw any conclusions about their concerns or needs,” he said. “Hence our interest in engaging the community, doing some research, reacting to their concerns and comments, and providing additional education, outreach, guidance and compliance as warranted.”