Tax exempt Application Notice from SPTRFA

December 27, 2013| To the Active Members of the St. Paul Teachers’ Retirement Fund Association

St. Paul Teachers’ Retirement Fund Association (SPTRFA) offers its members a tax qualified (i.e. qualified and tax exempt under 401(a) and 501(c)( 11) of the Internal Revenue Code) retirement plan. Your regular contributions and that of your employer school district are made pre-tax and earn tax exempt while part of the Fund. When you retire and begin receiving your retirement annuity, as with Social Security, your benefits are then subject to both Federal and state taxes.

Periodically, the SPTRFA Board of Trustees applies to the Internal Revenue Service (IRS) for re-determination that your retirement plan remains qualified under the Internal Revenue Code through a process of review by the IRS of applicable Minnesota law and our latest By-laws to make certain that no action has been taken that could adversely impact the plan’s tax qualified status.

This IRS review of plan documents process is formally referred to as seeking an IRS “Determination Letter”. Recently, the IRS adopted a rotating schedule for its Plan reviews. Public Defined Benefit Plans, such as SPTRFA, are placed within the “Group C” category. Using the classifications for various retirement plans, the IRS, on a rotating schedule (every 5 years), opens a one year review period. The period for review of Group C plans is currently open. It will remain so until the end of January. Pension plans are not required to seek IRS review each time the applicable window is open. However, the STPRFA Board of Trustees, which participated in the previous “Determination Letter” application process and received favorable IRS determination letters, opted to participate and apply for current determinations during this round.

The IRS requires that as part of the process of application for a “Determination Letter” that all Active Plan members be given a formal notice of this application to the IRS. That notice has been posted on the SPTRFA website. The posted notice alerts all active members of both the SPTRFA Basic Plan and SPTRFA Coordinated Plan that applications are being made for both plans. We will be filing our Determination Letter applications for those plans with accompanying updated materials on January 20. The “Notice” will remain on the SPTRFA website for 60 days following that filing.
If any active member has a question about this matter, you are requested to contact the SPTRFA office for further details.