Sen. Elbert Guillory, D-Opelousas, left, and Sen. Francis Thompson, D-Delhi. (Associated Press)
Last Modified: Wednesday, June 13, 2012 11:29 AM
BATON ROUGE (AP) — The Louisiana State Employees Retirement System hired a tax lawyer to review ramifications of a new 401(k)-style retirement plan for future rank-and-file employees hired starting in 2013.
LASERS Executive Director Cindy Rougeou told The Advocate that system leaders also are looking at whether they should file a lawsuit challenging the new plan that Gov. Bobby Jindal pushed as a way to shrink growth in retirement system debt.
"Do we have a duty as the fiduciary to seek a court opinion before we implement it?" Rougeou said.
The new plan, called a "cash balance" plan will operate similar to a private sector 401(k), except funds will be protected from investment losses. It will be the pension plan for all new state employees, except those in hazardous duty jobs, hired on or after July 1, 2013.
Lawmakers approved creation of the new plan in the just-ended legislative session.
Before the plan can begin, Rougeou said an inquiry must be made to the federal Social Security Administration to determine whether the plan would provide an equivalent benefit to Social Security. Otherwise, affected state employees would have to be enrolled in Social Security with required employee and employer contributions.
Also, the IRS must determine whether the new plan will be tax-exempt.
"To get those determinations, it can be very expensive. Is that something the system is paying for?" Rougeou asked.
During the legislative session, the chairmen of the House and Senate retirement committees said they would send a joint letter to the IRS requesting a determination.
But Sen. Elbert Guillory, D-Opelousas, said they've since been advised that either the legislative auditor or the state treasurer should write the IRS letter.
Both the treasurer's office and Legislative Auditor Daryl Purpera said they would be willing to file the letter with the IRS if requested to do so.