you you you you Okay. Good morning. We'll go ahead and bring this meeting. Okay. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. Good morning. So'll go ahead and bring this meeting of the Edgewater General and Police attention board for the meeting in the session. This is going to be a training session in this area. It's all going to be the goal call. It's okay. We're going to do this. Here. We're going to the Tally. Here. I'm here. I'm here. I'm here. I'm here. I'm here. All right. So we have a call. Over to the body. I hear you all the time. So today we're going to talk about legal issues lurking in pension administration. You all are a small closed plan, right? You have one active employee. So some of these things may not be as important for you or as urgent for you. But in case they come up, in case you have, I think it's important that you understand the relationship between your pension plans and other laws that happen out there and things that you might need to take a look at. So I gave you a list of the topics I'm gonna talk about. One is age 73 distributions. You might know it as the RMD. I mean, I think that's something that's heard in the press. Rollovers and transfers of assets, domestic relations orders, impact of divorces. So there was a change in state law. Powers of attorney benefits to minors, interim elections for benefits, and then mandatory contract language, which I think you talked about at the last meeting, but just as a refresher. So I think it's important for you all as trustees, as issues come before you, but particularly for the administrators to really be in the position where they're keeping good records near the top, where they're being a detective. I mean, really understanding being a detective. So I does come to you from a police background. So I mean, asking questions, not taking things at face value that come before you. There's, I'm going to say 75% of this time. There's another story that's underneath what's being presented to you. And if you don't ask questions about it, you're not going to find out that kind of information. So, you know, when you get records, ask for everything, not just what they want to present to you. Give me the background of this. I need to understand it. I think a lot of that comes up when a, somebody passes away, because you don't have that person to speak with anymore. B, it comes up in the divorce situation, because sometimes you're dealing with the former spouse. And know getting the underlying court records to you getting the agreement settlement agreement they entered into. I mean it's in theory it's not of our business but because we are paying on an income with holding order for Alimony and passport we need to understand what they agreed to because because this change in the law. So just getting to the nitty-gritty of those kinds of things is really important. Having policies and procedures, having operating procedures, which they do have at your administrative office. Being aware of the legal issues, again, having these kinds of presentations to you, knowing what your plan says, knowing what the law says. At least from a top of head level, where you say, wait, I'm supposed to ask more questions about this particular issue. I mean, that in and of itself is enough that you go back to the administrator, you come back to the attorney to say, hey, something else needs to be done here. I don't know exactly what it is, but I know that I heard that we're supposed to do something. And then, you know, clearly communicating back to everybody, making sure that everybody's in the loop on those kinds of situations. So the first thing is the age 73 distributions. Now this has been actually an active part of changes to the federal law over probably the last five years. It used to be 70 and a half. 70 and a half used to be the age at which you had to take your money out of your pension plan. Because you're a defined benefit plan, it is usual that your members would come in before that particular age. But if you have somebody who's not collecting and they are now at 73, we need to make sure that they're getting that money out. Because the plan is responsible for making sure that the required minimum distributions are made, or at least doing its due diligence towards making sure that we can find the person and Make those required to distributions So You know, I talk here about drop-in share accounts because that's the majority because you are defined benefit programs And the you know the clients we speak to are defined benefit programs the majority of the places where you'll find that people aren't taking They're their distributions or from those lumps, some amounts of money. So the Internal Revenue Code requires distributions to be made at age 73. So it moved up slowly, so it went from 70 and a half to 72. It came up to 73 and another slide tells you it's I think 2030 is going to go out to 72. It came up to 73 and I'm going to, another slide tells you it's in, I think 2030, it's going to go out to 75. So, and the reason is because pension plans were not meant to pass on wealth. Pension plans were meant to provide support and income for people during their lifetimes and the lifetime of their spouses, particularly. I know that many people opt to take their pension fund and leave their remainder, they take as a joint annuitant to their children. Sometimes that means that they're taking less in their lifetime to leave money to their children. Sometimes, depending on the age difference, it could mean that they're getting more in their lifetime and leaving their children less in their lifetime. So it's just an interesting operation of the Internal Revenue Code. And the reason why that is is because the the internal revenue code wants it to be paid out fairly during the lifetime. Because the whole idea of the pensions, again, was to provide support in your retirement years. And so they made it tax-free to save towards retirement. But they want their taxes back when you're in retirement and you're actually getting that income. So, you know, it balances the scales. So if they spread it out over a longer period of time, then anticipated. They're not getting the return on their investment, right? So this is why you do have that requirement. And I was wrong. It's 2033, the RMDA is going to go to age 75. So the first one is always the most complicated one, because you have until April 1st to take of the following year to take your distribution. But you have to take your second one in that second year. So if you don't take it the first time that you're eligible, then you've got two in the next year. So it makes it more complicated for tax purposes, because it's taxable amounts of money. It's not money that can be rolled over. To find benefit pension programs, as I said earlier, we're responsible to make sure that you take that withdrawal. So you can't say I've taken my withdrawal from my IRA. You still have to take it from our plan as well. So you can combine your IRAs for your personal purposes to take your RMD. You don't have to take it all from one. Take it from any of them. You can take it from one. You don't have to take it from each of them though. Why do you have to do this? it used to be that there was a 50 percent tax on the amount of money that you should... Why do you have to do this? Well, it used to be that there was a 50% tax on the amount of money that you should have taken if you didn't take it when you were supposed to. They reduced that. So in the Secure Act 2.0, they reduced that to half. So it's now 25% penalty. And actually, there's a good faith exception, which can reduce that down to 10%. And so, you know, the Secure Act 2.0 and the Secure Act were both very good benefits for pension plans and participants in pension plans across the country. So this is one of those places where they really took a look at what they were doing and realized that that was that was a really a significant penalty for something that's really complicated. It's not it's not an easy thing to do and I don't think a lot of people really know particularly now in this world where many people are managing their own retirements. There's not necessarily people that are managing like for you. And so I think it was a really good benefit to put into place for people and also giving them a good faith exception. Like, oh my gosh, it's the end of the year and I didn't do what I was supposed to. And just by, you may have even gone, December 15th, to get it done, but you can't get the money out until after in January. So again, I thought it was a good idea. So what I tried to do with the end of each of these sections is to provide you with the best practices, a thought of how to get this done. So annually search your system for retirees that are going to turn 73 so that you can start at the beginning of the year to say to them, hey, you're going to need to take this money out of the pension plan or start taking your pension, start filling out the paperwork so that we're going to be on time so that you are not in this situation where you're going to have a penalty assessed against you. You know provide notices of RMDs, give them and maybe we should even add it into your summary plan description. I'll take a look and see and make sure it's in there. Have that calculation of the amount of the distribution done according to the IRS tables and you know get your actuary involved in helping you to solve that particular problem. Does anybody have any questions about the RMDs? There were clients and you take the money at 73 but did they require a percentage? Yes, so it's an actuarial calculation. It's, I don't even know. Do you know what the number is? I don't. I don't know what the percentage is. But it's like, work 5, 10%. It's based on an actuarial lifetime table because you're supposed to pay it out over your lifetime and the lifetime of a survivor if you have it or are joined to new attend. And so there's tables that tell you how long you're going to live and you know, do the calculation of how much that is on an annual basis. It's not as much as people think it's going to be, but it's not nothing. You Google it, though. Yeah, yes, yeah, the internet will tell you. I don't know if it'll be right, the internet will tell you. I don't know if it'll be right, but it will tell you. It'll be close. So another piece that may not be applicable to your current plan, but certainly, if you have any IRAs or any other investments outside, including your 457 plan, you know, the rollovers, I think, are important. So you can roll over your money from one type of investment into another type of investment without having to take it through your hands. You know, used to be long time ago. You'd have to take it and then you'd have a sort of period of time that you had to roll it over. Because the IRS was in the situation of, you know, people not doing it and they weren't collecting their taxes, they put the burden on the pension plans to collect 20% upfront, which isn't enough to pay the taxes on whatever's being rolled over. I mean, people will still have a tax liability at the end of the year, but at least it captures most of the money that would be payable. So we have a document now that we need to provide out to anybody who's getting a lump sum amount of money. And we have to give them 30 days to take a look at this and then we can make the distribution if they haven't returned it. If they sign it, then you can make the distribution after they've received it. The special tax notice is one of the documents that has been produced by or for the IRS. That I feel is really user friendly. It's something you can read and you can understand. It explains to you what is roll over eligible, what you can roll over from one fund to another. So the RMD is not roll over eligible's money that you have to take, you have to pay taxes on and hopefully you spend. The requirement, it explains all of the things that are subject to a 10% penalty. It gives you an entire list where you would have an early distribution that's subject to it. It tells you how to avoid that type of penalty conversely. So one of the situations that pension funds are in. So if we have contributions that where we need to return to someone and we can't find them. The IRS says if you're not going to hold it for them then you need to put it into an IRA for somebody. You need to go out. You need to open an IRA and roll that money into the IRA. Which to me is a scary prospect because, so you can't forfeit it into the state treasury, for example, because they want it to earn money, except they're going to pay money to earn money, and nobody's going to be managing it. I mean, that's always been a real quandary for me. So, you know, keeping any kind of refunds of contributions available to people, because they'll come here, we'll have a better time in identifying them, then just opening an account for them at some bank somewhere and and hope it all works out for the best. So one of the things that we are as pension funds have been pushed down upon is the issue of finding doing due diligence to find people. The IRS used to be in the position of helping us to find people. We would be able to send a letter to the IRS, and they would forward that letter to the last W2W9W, whatever form that they had on files, internal revenue code, internal revenue forms, and they would forward it to that address for us. And so the person would know that we were looking for them, that we had money for them, and they could help us to find it. Well, they got out of that business. The DOL, the Department of Labor, might be getting back into the business, but right now, the responsibility, I know. Nobody's getting back in debty business. So we are in the position of having to look for people if we can't, if we don't have an address for them, if we've lost contact with them. So we have to look for them at the employer, right? Ask people, do you know where John Smith is? If we can't find them that way, then we have to look for them online. If we can't find them that way, then we have to pay for somebody to help us look for them. And so once we've done all of those things, then, you know, if we can't find them, then we kind of just sit on the money and wait until they return. It's probably something, you know, again, if you're going to pay somebody to help you find someone, that you would have to do periodically to keep up your due diligence. And that's one of those things where we want to make sure we keep the records that we did the best that we could to find these people, but we couldn't locate them. Qualified domestic relations orders. That is an instrument that is created in the private sector for divorces and it divides pensions in the event of a divorce. Governmental pension plans, though, are not subject to the section of the internal revenue code that allows for domestic relations orders to divide pensions. Our plans are not subject to garnishment, alienation, any type of use by a third party. We can only pay directly to our participant, to our member. So there has come a line of cases though in Florida, which have allowed for alimony or child support to be paid to a spouse or on behalf of children in a divorce situation. So it's a specified form that the court enters an order that indicates that you would pay X number of dollars so they tell you how much you pay on a monthly basis to the member as a deduction from their pension check. And in all of those cases, it's paid to the state disbursement unit. So there's a group at the state who gathers alimony and child support and pays it back to the other person, whether it be an expausal or someone on behalf of children. But I'm going to say 50%, and that might be generous, of the divorce lawyers. Don't know that governmental sector pension plans are not subject to walk-quadrant. So we get lots of quadros that we have to send back and say, no, sorry, we can't do this. We can accept an income deduction order or income with holding order for alimony or child support. They're like, well, this is for neither. This is for equitable distribution. And so, a little bit about divorce law, right? When you get divorced in Florida, generally speaking, 50% of everything you own goes to the spouses, right? You divide everything equitably. And the way that they do that is they do a building block, right? They take somebody gets the house, or they take the house and sell it and divide it. If somebody gets the house, then they've got to build something over here to equal the cost of the house, right? So they, they, they, they, they, they, they, they, they, they, they, they biggest liquid assets, I don't know, I use liquid loosely. Those are the biggest liquid assets that people have. And so they use that to resolve that issue. The law does not require our pension funds to honor equitable distribution, only Alamoney or child support. So sometimes they make equitable distribution look like Alamoney. Sometimes they can't resolve the issue. And so we have developed an order that allows the parties basically to say it's my pension. I will go to my pension office and you have to be in receipt. It's not something you can do before the pension begins. I go to my pension office and I say Troy take a thousand dollars out of my paycheck and put it over here in this bank account that my name is on but also my former spouse. My former spouse can withdraw money from that account. So we've kind of tried to create a workaround so that they can put into effect the equitable distribution. The pension fund is out of the whole process. It is not legally obligated to do anything. It's all on the participant themselves to come in and make that division to open those bank accounts to make sure that the spouse can withdraw it. And I'm subject to contempt if I don't do the things that I'm supposed to do. You know, I have to go before the judge and defend why I did not set up that account, why I'm not paying the amount of money that I'm supposed to pay. And, you know, I can be penalized personally, but the pension fund is not responsible for it. So that's the best workaround that we've come up with to try and resolve that particular issue. In the event that there is a lump sum amount of money, so a drop account or a share account, they can roll that money out into an account that's their own and then that IRA can be subject to a qualified domestic relations order. So a little bit messy if you get divorced in your dividing pensions in the governmental sphere, but there are ways to work around it. But again, I'm going to say, generously, about 50% of the divorce attorneys don't know that. So we spend a lot of time educating divorce attorneys about the best waste. I'm gonna skip over to... There's a couple of cases in Florida. I'm not gonna go through all of that. So I'm going to skip over to, there's a couple of cases in Florida, I'm not going to go through all of that. So I'm going to skip over to a divorce after July 1st of 2012. So one of the issues that we ran into a lot was that members would not change their designation of beneficiary after they were divorced, including even after they got remarried or had children. They wouldn't update them. And so sometimes people would die and their former spouse was still the designated beneficiary. This was a problem for divorce lawyers and so they went and had the law changed. And the law says that divorce voids the designation of beneficiary or joint annuitant of the divorcing parties where they're named. So it cleaned up for us, the issues, although we now have to make sure that we know whether that person was married or divorced, or previously divorced, you know, when they pass away. So actually, on the death certificate, I was never aware of this until this law passed. It tells you on your death certificate when you're married or divorced at the time that you pass away. So there are a couple of ways in that particular law that the designation of beneficiary can be saved. And by the way, this is on life insurance, this is on bank accounts, this is any type of designation of beneficiary gets voided if there's a divorce. I have a good question. Even if you have minor children, the ex has to be the benefit of the children. I'm just going to ask the same thing, because some people do want their ex. So if they want their ex, they have to come back in and fill out another designation of beneficiary, or have in the divorce decree a provision that the spouse remains the designated beneficiary until the children are 18 years old or the remains the designated beneficiary forever remains the designated beneficiary for a portion. You have to spell it out in your divorce decree. So that's one of the things that we have to look at if somebody passes away, they've died and they haven't changed their designated beneficiary. They've just kept it the same going forward. And oftentimes it's a surprise for the former spouse because they don't know this. And so again, this is something that their divorce lawyer should be speaking to them about and getting their input on four purposes of the marital settlement agreement. But it does solve problems for us, right? Because we were often in the middle of my boss likes to tell the story of he had a sanitation worker that passed away in the city of Miami and six women came in. So he married one and divorced. He married two and divorced. He married three and ran away. And then he married four and five and six. But he never got divorced from number three. So the benefit was payable to the spouse. So it wasn't a designated beneficiary, but it was a spousal benefit. So three was the lottery winner in that particular case. That's all. But see the detective work that he had to do to get to what is the answer in this situation? You said something earlier also about the death certificate. It says if you were divorced or married. What if you divorced and you remit married? So it says, it married, but you had been divorced for previously. Well, that's another detective situation that we have to be in to figure it out. And we would probably find out if the first spouse shows back up. I'm not 100% sure. I'm remembering my mother's assessment of hip-hoping, and I know that you said divorce, but I think it also listed the guy she divorced on the certificate. So when that instance, if she was married, it would show who she was married to on the basketball event. I didn't realize that. I didn't know that information. Yeah, me. So it's pretty interesting. Because they were asking me questions with my mom passed away. And I was like, he's not on record. I was like, he's not in the picture. And I was like, OK, we just need to know. It's interesting. Well, I think the reason they did it, and I don't know if it's still the love of all, so don't quote me, but I know that if you're a, a, an organ donor on your license if you were to divorce your ex-husband still had the rights to to revoke that or yeah I don't I don't think it's still the case because I just went and got renewed my license and they asked me did I want to continue to be an organ donor in my husband with me, so I know. But I wouldn't be surprised. Oh, yes. I mean, I was shocked. I was like, I'm the worst. I don't want him to. So another place where, and this is becoming more and more, I shouldn't say an issue, but something more and more that we see, which is powers of attorney, you know, as our population of retiree ages, as they live longer, but aren't necessarily able to take care of their own matters. We see a lot of powers of attorney and me being a very cynical, respectful person. I worry. I worry about who has the power of attorney and what those powers of attorney are going to be doing for the people that there's those to be taking care of, particularly when they're not family. You know, we have a lot of people that we pay benefits to who are in nursing homes. And the power of attorney is with that company because they receive their benefits to pay for their care and services. which always gives me a little bit of deep breathing. So one of the things that happened is in 2011, the state of Florida changed the rules for powers of attorney. And so now we have really specific things that people have to consent to for powers of attorney to be able to take care of them. The general powers of attorney will allow them to come in and change their address, allow them to change their banking from one account to another. But you have to be really specific if you want your power of attorney to be able to change your joint annuitant or your designated beneficiary. You have to be real specific if that money is to be diverted any one other than to our participants. So it's important that we take a look at really kind of what the power of what the power of attorney says, where when it was executed, where it was executed. So we have the right, as the pension fund, if we, you know, have questions about it, to ask the attorney who drafted it to give us an opinion letter that it meets the qualifications in the state that it was executed in, if it wasn't executed here in the state of Florida. You have a very short period of time to deny a power of attorney and so you know it's we really you know want to make sure that we're looking at it in an appropriate way. I think one of the One of the things that is in the state statutes that I take advantage of as much as possible possible is giving an affidavit to the person who's executing the power of attorney because it says, you know, the person that I'm executing this on behalf of is still alive because powers of attorney don't extend after death. They do extend, if they're called, they durable power of attorney. They do extend into disability. So if you become unable to, you know, write or see, you know, or think the power of attorney extends into that disability. But it does not extend beyond death. So make them swear that that person is alive, that they have not revoked the power of attorney, that they have the right to act, that they've not been divorced. So a divorce actually avoids the designation of power of attorney of the former spouse. So we have to ask them all of those questions. So, I have them sign that, affidavit, every single time they come in to exercise the power of attorney. So, gives me a little bit of comfort that at least if it's not accurate, then we've done the best that we can. The state does try in its statutes to uphold powers of attorney because they're important. I mean, the whole idea is to allow people to do their business even when they can't. They give, like, I'm going this week to meet with somebody to change my power of attorney, because I'm going to put my 30-year-old children in charge, right? And so, you know, you just wanna make sure that that actually happens. You know, if I get into an accident and I can't do what I need to do and my husband isn't around to do it, my children can take care of it and make sure that we're taking care of. So, the state does want that to happen. The state doesn't want to put roadblocks in the way, but gives us as the pay or the right to look into the detective and look into whether it's appropriate that those people actually use the powers of attorney. Benefits to a minor. So this is another very interesting thing about our state law. So if a benefit is going to be more than $15,000 that's paid to a child, they have to have a legal guardian. The parent can only act on behalf of the child if the amount of money they're going to receive is less than $15,000. Most of this has grown up out of personal injuries to children where there is a recovery that the parents need to manage. but we have run into it a lot with our pension funds. So I have actually a couple of situations, one where there's a refund of contributions that's due to a child that's about $37,000. And this is more than $15,000. We have to get the parent to become a guardian. I had two children recently that their father passed away. There is $150 to children on a monthly basis. The children are young enough that the amount of money that they're going to receive is more than $15,000. So that mother needs to become a guardian for her children. So it's a legal process. You have to go to court. You have to get appointed as the legal guardian. You have to set up trust accounts for the children. I mean, it helps. I went to law school with a girl who was burned as a child and got money. And her, this is way before this law, and her family spent the money on her ish by Inferniture. But didn't tell her, and she went to law school expecting she was gonna have money to do that, and she didn't have it. So this law actually requires you to have the court oversee the distributions that are being made. And so you have an overseer to make sure that that kind of thing doesn't happen. Interim benefit election, again, you have one member, but sometimes, you know, there is a way that people want their benefit to be paid, and it's not the standard for. So not, you know, life with 120 payments, which means that your beneficiary gets 120 payments. So they can come in early and make it, if your plan allows it, and make an election to set in place that, you know, I want 100% joint survivor for me and to my spouse. So that if something happens, you know, that's already in place, that no choice needs to be made. It can always be revoked when they come up for their final determination of what they're going to receive and their benefit, but if they don't make it, they have that in place for them. There's been a lot of death talking. It's a really bad way to start out on the table. I have pictures. The last item that I have is just kind of mandatory language on contracts. So we have, like, now a couple of pages that we have to add to every contract, that we have to make sure that the Florida Statutes 119 is in place. So there were a lot of people who were doing services for governmental entities. So I'll use foster and foster as an example, although they never refused to provide documents. But taking the position that we're not subject to a public records request, well you have all of the pension fund records which are subject to a public records request. So you need to help us to respond to that particular request. So this language indicates to them, look, you are taking on the responsibility of helping us to respond to public records request. You are taking the responsibility that if the contract ends, you're going to give us back all of our documents. And if you don't give us back all of our documents, you remain subject to the public records if we have to reach out to you and you and you will give them to us without cost. So I think it helped to clarify for a lot of service providers, what kind of what their responsibilities are. And not necessarily the record keeper, the administrator, but people that were kind of further out on the fringe of what happens. So it's in Frank's contract. You'll turn over any documents. They turn it over on a regular basis. So there wouldn't be anything that necessarily we would have to go back and collect from them, but again, making them understand that they're responsible for public records. We have eVerify requirements in the state of Florida, so first the governmental entities, but now I think every employer in the state of Florida that has more than 25 employee the ease of subject to the E-verify now. So everybody's really kind of used to that process and having to register with the E-verify and use it for the determination of work eligibility. I know Sean talked to you last time about the new human trafficking requirement and the new requirement of if you have access to personal identifiable information that you need to swear that you are not part of a foreign country of concern. I think that's it. Does anybody have any questions? All right. Thank you very much. Is it legal to start the baby now. Okay. Oh baby pictures. Let's bring it back to the coffee. Yeah. Yeah. I'm gonna try to turn this off, turn it back on.