State and local government plans are not taxable entities, so they do not benefit from the first 2 key tax benefits. The third benefit does apply because it allows the employee to defer tax on the employer contributions and income on the assets until the employee retires and begins to draw a benefit. Moreover, if a plan is inadvertently disqualified without the knowledge of the employer, the employer can be held liable for the amount of tax withholding it should have done, even though the error may be discovered too late to allow for the money to be taken from the employee s check. Generally inapplicable per Taxpayer Relief Act of 1997. State and Local Law.
Plans generally cover all full-time employees within an occupational classification.
State and Local Law. Generally board of trustees made up of individuals with different backgrounds establish overall policy for administering plan. An executive director is responsible for daily administration of plan. Board members may include employee representatives, retiree representatives, employer representatives, governmental officials, representatives of members of public, and individuals with special skills, such as investment expertise. Funding requirements not applicable, except that state and local plans must comply with requirements of IRC Sec.