https://www.americancityandcounty.com/wp-content/themes/acc_child/assets/images/logo/footer-logo.png
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcast
  • Resources & Events
    • Back
    • Resources
    • Webinars
    • White Papers
    • IWCE 2022
    • How to Contribute
    • Municipal Cost Index – Archive
    • Equipment Watch Page
    • American City & County Awards
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Privacy Statement
    • Terms of Service
American City and County
  • NEWSLETTER
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcasts
    • Latest videos
  • Resources/Events
    • Back
    • Webinars
    • White Papers/eBooks
    • IWCE 2022
    • How to Contribute
    • American City & County Awards
    • Municipal Cost Index
    • Equipment Watch Page
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Cookie Policy
    • Privacy Stament
    • Terms of Service
  • newsletter
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
  • Magazine
acc.com


Examining reporting standards criteria

Examining reporting standards criteria

City or county officials in charge of IRC Section 457 deferred compensation plans may have questions about their fiduciary responsibilities under the
  • Written by Wesley Galloway
  • 1st February 1998

City or county officials in charge of IRC Section 457 deferred compensation plans may have questions about their fiduciary responsibilities under the new Governmental Accounting Standards Board (GASB) Statement 32. The degree to which a local government administers its plan is a key point in determining its reporting requirements.

Often, a local government forwards payroll withholdings to a third-party administrator. If the government does not have responsibility for the plan and is not formally considered the plan’s trustee, then it would not have fiduciary accountability and is not required to report the plan in its financial statements.

Conversely, a government may self-administer its plan, performing all investment and accounting functions. In that case, the government clearly has fiduciary accountability for the plan and should report it in its financial statements as an expendable trust fund.

Statement 32 from the GASB states that “a deferred compensation plan that meets the criteria in [National Council on Governmental Accounting] Statement 1, … paragraph 26(3)(8), for inclusion in the fiduciary funds of a government should be reported as an expendable trust fund … .” Thus, governments must determine whether their 457 plans are “held by a governmental unit in a trustee capacity or as an agent for [others] … .”

Some plans may meet this criterion; others will not. The GASB has not defined what is meant by the terms “trustee capacity” or “agent,” and it has not provided guidance on what activities meet this fiduciary criterion. The challenge for municipalities, therefore, is to determine whether their level of involvement with plan activities is great enough to meet that criterion.

Statement 32 addresses the new Internal Revenue Code subsection 457 (g), which states that “all assets and income of the plan … are [to be] held in trust for the exclusive benefit of participants and their beneficiaries … .” Plans existing before Aug. 21, 1996, have until Jan. 1, 1999, to comply.

However, until a plan’s assets are held in trust, GASB Statement No. 2, which has been in effect for more than a decade, still applies. Statement 2 requires all plans to be reported in agency funds or as assets and liabilities of proprietary funds. Governments that use third-party administrators for their 457 plans should consult with the administrators to determine whether their plans comply with the trust provision.

Once the matter of a trust has been resolved, the next question is whether the plan covers a governmental-type fund. With the exception of public employee retirement systems, proprietary-type funds and entities (those managed like private sector businesses) traditionally do not report fiduciary activities such as 457 plans. At the moment a plan complies with the new trust provision, Statement 32 supersedes Statement 2 and its reporting requirements.

Thus, under Statement 32, enterprise and internal service funds need not report 457 plan assets or liabilities. Likewise, special purpose governments – utilities, for example – that use enterprise accounting, do not need to report 457 plans. On the other hand, if a 457 plan covers governmental-type funds or entities (e.g., a city general fund), that plan might have to be reported.

Finally, only one government at a time will meet the fiduciary criterion for any given 457 plan. Therefore, if one government administers and correctly reports the plans of other governments, those other governments would not have to report their individual plans.

Tags:

Most Recent


  • When spending federal stimulus dollars, local governments are considering long-term, community impact
    From staffing constraints to budget shortfalls and an unprecedented pivot into the digital realm (driven by the pandemic), local governments have confronted myriad challenges over the last few years. But in this, there’s a bright spot: The federal government is investing an unprecedented amount of money into local governments. “The covid pandemic shuffled the deck […]
  • Reno, NV
    In Nevada county, data underpins efforts to address climate change
    Across the United States, cities and counties are doing their best to confront climate change in myriad ways—from bolstering seawalls to updating electrical grids and everything in between. But in order for communities to best direct their efforts and responsibly spend hard-earned taxpayer dollars, administrators need data. In Washoe County and Reno, Nev., for example, […]
  • $52B semiconductor investment intended to rejuvenate American manufacturing
    Three decades ago, American manufacturing dominated the semiconductor industry, producing about 40 percent of the global supply annually. But over time, companies shipped business overseas looking to cut costs, and today, the nation produces only 10 percent of all semiconductors. It’s something the Biden Administration is trying to change through CHIPS and Science Act. “There […]
  • How capital improvement project prioritization helps secure infrastructure funding
    Trillions of dollars in federal infrastructure funding have been made available to state and local governments across the U.S. since early 2020. This money has been allocated to address the nation’s aging infrastructure, much of which is at or near the end of its useful life, and to bolster the U.S. economy in the wake […]

Leave a comment Cancel reply

-or-

Log in with your American City and County account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • NLC releases State of Cities 2021 report
  • How governments can keep employees safe as they return to work
  • Lessons from your friendly neighborhood public service employees
  • North Texas alliance partners with Marketplace.city on smart government solutions

White papers


Modern American Perspectives on Law Enforcement

14th July 2022

Reimagine the Employee Experience

12th July 2022

How to Assemble a Rockstar Website Redesign Steering Committee

7th June 2022
view all

Events


PODCAST


Young Leaders Episode 4 – Cyril Jefferson – City Councilman, High Point, North Carolina

13th October 2020

Young Leaders Episode 3 – Shannon Hardin – City Council President, Columbus, Ohio

27th July 2020

Young Leaders Episode 2 – Christian Williams – Development Services Planner, Goodyear, Ariz.

1st July 2020
view all

Twitter


AmerCityCounty

When spending federal stimulus dollars, local governments should consider long-term, community impact dlvr.it/SWXJWZ

12th August 2022
AmerCityCounty

In Nevada county, data underpins efforts to address climate change dlvr.it/SWTGHy

11th August 2022
AmerCityCounty

$52B semiconductor investment intended to rejuvenate American manufacturing dlvr.it/SWPqHQ

10th August 2022
AmerCityCounty

How capital improvement project prioritization helps secure infrastructure funding dlvr.it/SWLQB7

9th August 2022
AmerCityCounty

Climate bill lauded; predicted to reduce nation’s carbon foot print by 40% within decade dlvr.it/SWHGQL

8th August 2022
AmerCityCounty

Partnership launches no-cost wastewater monitoring service for local governments dlvr.it/SW7N74

5th August 2022
AmerCityCounty

Investing in America’s onsite wastewater treatment systems for equity and sustainability dlvr.it/SW4Mb9

4th August 2022
AmerCityCounty

With passage of PACT Act, veterans service officers are preparing for an influx in applicants dlvr.it/SW4KTg

4th August 2022

Newsletters

Sign up for American City & County’s newsletters to receive regular news and information updates about local governments.

Resale Insights Dashboard

The Resale Insights Dashboard provides model-level data for the entire used equipment market to help you save time and money.

Municipal Cost Index

Updated monthly since 1978, our exclusive Municipal Cost Index shows the effects of inflation on the cost of providing municipal services

Media Kit and Advertising

Want to reach our digital audience? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • IWCE’s Urgent Communications
  • IWCE Expo

WORKING WITH US

  • About Us
  • Contact Us

FOLLOW American City and County ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2022 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X