On March 15th, the IRS held the first "town hall" meeting on draft regulations issued in November 2011 to define what is a government agency and what is a government retirement plan. The IRS panel featured five top IRS staff members including Andy Zuckerman and Pam Kinard, the principal author of the draft regulations. The format was similar to a standard hearing on proposed regulations.

Approximately 75 people attended. More than a dozen spoke. While all thanked the IRS for making the effort to come listen, everyone told the IRS that the regulations need to be changed. Attendees felt that the retirement systems could not act as 'cops on the beat' to enforce IRS rules – which is what the current draft effectively requires. The rules themselves contain a number of ambiguous tests that the audience stressed need to be changed. Retirement plan fiduciaries indicated they need certainty.

Associations, employers and unions involved with charter school employees were out in force to tell the IRS that the regulations would severely impact the ability of these schools to recruit employees if charter school employees are excluded from governmental plan coverage.

The IRS response was: we are here to listen; we appreciate your input; we are not in the business of shutting down retirement plans or hurting participants; and we intend that any regulations will be "prospective." No guarantees were (or could be) given.

The CaliforniaTeachers' Association representative got it right – this is about retirement security. The draft regulations create too much uncertainty about the status of government retirement plans, and that raises many questions about retirement security.

Hanson Bridgett's attorneys will continue to monitor the situation. To stay informed, be sure to join our employee benefits mailing list.