Sanchez Urges Feds to Expedite IRS Review of OC Pension Changes

Congresswoman Loretta Sanchez (CA-47), a member of the bipartisan Joint Economic Committee, today sent a letter to U.S. Treasury Secretary Timothy Geithner urging him to expedite the Internal Revenue Service’s (IRS) review of Orange County’s proposed changes to its pension program. The changes, which have the support of Orange County’s largest union and Governor Arnold Schwarzenegger, would help address the significant financial burdens imposed by the County’s current pension formula.

 To date, Orange County has not moved forward with the pension overhaul because it is unclear how the proposed reforms might impact the tax burden of thousands of County workers. County officials have repeatedly reached out to the IRS to provide guidance on the issue, but a workable solution has not yet been reached. Rep. Sanchez’s letter urges Secretary Geithner to speed up the IRS review process so the County can either implement its proposed pension changes or assess other means of pension reform.

 “The proposed changes to Orange County’s pension program are essential to keeping the County financially stable,” said Rep. Sanchez. “But in order to move forward, we need the IRS to provide concrete guidance on the tax implications of the proposed overhaul. I urge the Treasury Secretary to act quickly to ensure that Orange County’s pension program continues to provide retirement security to local employees.”

 A copy of Rep. Sanchez’s letter to Secretary Geithner is available below:

 Dear Secretary Geithner:

I am writing to ask for your help on an issue of great importance to the County of Orange, California. As with many public entities around the Country, Orange County is working to address significant financial burdens resulting from the County’s pension obligations. The County and its largest union, Orange County Employees Association (OCEA), have worked together to propose changes to its pension structure that would address this concern and benefit both the County and its employees. This could be a helpful and necessary step in addressing the significant pension burdens of many state and local governments while continuing to provide retirement security to its employees. Governor Schwarzenegger signed urgency legislation in October 2009 to allow the County to implement these changes.

As the County of Orange prepared for implementation, the County became aware of possible negative tax implications for its 13,000 participants and has been diligently working with the Internal Revenue Service (IRS) Employee Plans Division, Fran Sloan, as well as Treasury officials, George H. Bostick, Benefits Tax Counsel, and J. Mark Iwry, Senior Advisor to the Secretary and Deputy Assistant Secretary (Retirement and Health Policy), who have been consistently sympathetic to the issues and have assured the County that they are actively working to provide guidance addressing the matter.

Almost a year has passed, however, and the County is unable to proceed with the new program. I am writing to ask for your assistance in encouraging a swift and positive resolution for this issue, which I believe will promote financial stability for the County of Orange, provide greater flexibility to its employees in their retirement planning, and establish a national model.

Thank you in advance for your help.

Sincerely,

Loretta Sanchez

Member of Congress

  3 comments for “Sanchez Urges Feds to Expedite IRS Review of OC Pension Changes

  1. Rampant Corruption
    December 21, 2010 at 12:39 pm

    Why didn’t the supervisors contact Ms. Sanchez before they spent a ton of money on lobbyists to talk to the IRS. Seems like contacting Ms. Sanchez and other members of Congress should have been one of the first things the supervisors should have done.

    Anyway, once the new pension formula passes the IRS, it is doubtful many employees will opt into it. 1.62% at 65 with a possible 401 match is not a very attractive formula compared to the 2.7% at 55. It is VERY doubtful any of the supervisors or other elected officials will opt into the new plan because they are too smart to cut their own pension. All the new option will do is lure in the naive with a promise of a more take home pay. What they probably won’t tell people is that part of the employee contributions are there to pay for the 2.7% option that other employees are getting. Also, no one will tell these employees that the 1.62% is all they will get because county employees do not receive Social Security.

    Just a bad deal for the employees.

  2. Josh
    December 22, 2010 at 4:59 pm

    Nobody is going to take the new formula. 1.62 at 65 is worthless and a 401k would help but are not meant to make up a majority of your portfolio, you will never be able to retire on a 401k. The only way it is going to work is you have to make new employees take it. The regular county employee gets 2.7 but remember they pay 100 percent towards that benefit and costs the taxpayer zero. Also OCERS is one of the top funds in the country and even if the employees didnt make one more payment, it can pay full benefits for the next 20 years. There is no pension crisis, this is made up by Moorloch and the Republican party who want to get rid of the middle class. Plus as the economy rebounds OCERS will make record gains and we wont even be talking about this.
    The union sold us out on retiree health care and now this!

  3. December 22, 2010 at 11:13 pm

    The fundamental problems are:
    (1) The U.S. economy is collapsing. Every financial arrangement is in danger, public and private pensions, Social Security, 401k’s, everything.
    (2) Obama is insane. He apparently believes he can use the IRS to stall the agreement between the Orange County Employees Association and the OC Board of Supervisors until after the November 2012 Presidential Election. It’s been nearly a year and still no word from the IRS about the possible negative tax implications for 13,000 pension plan participants.
    (3) Wall Street owns Congress.
    In 1999, ninety percent of the US Senate voted to end Glass-Steagall protections for the nation’s banking system.
    In the House 73% of the Democrats voted to end Glass-Steagall.
    93% of the House Republicans voted to end Glass-Steagall.

    http://www.larouchepac.com > War Room > World in Review, 6 minute video.

Comments are closed.