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
    • Latest videos
    • Product Guides
  • 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
    • Cookie Policy
    • 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
    • Product Guides
  • 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


  • Report: With increasing popularity of e-bikes and e-scooters, there's a need for 'safe and connected infrastructure'
    Electric scooters and e-bikes are rising in popularity. As transportation options diversify, local policymakers are beginning to integrate micromobility means as integral fixtures in transportation networks and climate action plans, given their health and climate benefits. But along with solutions, they’re also bringing with them a slew of hurdles. A report out of Oregon highlights […]
  • New York mayor announces city-wide curbside composting program, impacting 8.5 million residents by 2024
    On the heels of a successful 3-month-long pilot program in Queens, New York City has announced the largest curbside composting program in the United States. The initiative will begin following a winter-long hiatus of the Queens pilot, which is set to return permanently March 27. Curbside service to Brooklyn will begin Oct. 2, followed by the […]
  • Phoenix
    Federal funds help fast-growing Arizona city address several infrastructure challenges and needs
    Joe Giudice, public works director for the city of Phoenix, says the influx of new residents is driving a lot of construction in his community. “Phoenix is the fifth largest city in the United States. It is one of the fastest growing cities in a fast-growing region, which influences infrastructure product and service demand. This […]
  • How 5G is making cities safer, smarter, and more efficient
    This article first appeared on Urgent Communication. It’s a scenario we’ve all experienced: an ambulance with a blaring siren racing against time to get a person in medical distress to a hospital through traffic. What we don’t see is 5G connectivity enabling paramedics to communicate with hospital staff via video conference and coordinate care in […]

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


Modernizing government services for today’s resident expectations

24th January 2023

Preparing Your Community Now for the Next Generation of Older Adults

18th October 2022

Helping Government Fleets Achieve Their Goals

30th September 2022
view all

Webinars


How To: Evaluate Digital Government Service Delivery Technologies

23rd January 2023

Using Technology to Enhance Communications

29th November 2022

Learn the benefits of transforming and automating your Contract Management process

4th November 2022
view all

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

GALLERIES


Report: While remote work is causing offices to empty out, walkable cities are still in high demand

26th January 2023

10 American cities with a great downtown

24th January 2023

Miami leads the way in FT-Nikkei ranking of best U.S. cities for foreign companies

20th January 2023
view all

Twitter


AmerCityCounty

Report: With increase popularity of e-bikes and e-scooters, there’s a need for ‘safe and connected infrastructure’ dlvr.it/ShlKmJ

31st January 2023
AmerCityCounty

New York mayor announces city-wide curbside composting program, impacting 8.5 million residents by 2024 dlvr.it/ShhRk1

30th January 2023
AmerCityCounty

Federal funds help fast-growing Arizona city address several infrastructure challenges and needs dlvr.it/ShhBtf

30th January 2023
AmerCityCounty

How 5G is making cities safer, smarter, and more efficient dlvr.it/ShYNcx

27th January 2023
AmerCityCounty

Shifting city demographics present an opportunity to build coalitions, address inequality dlvr.it/ShYMMm

27th January 2023
AmerCityCounty

Spending American Rescue Plan Act funds: A primer for municipalities dlvr.it/ShXzvl

27th January 2023
AmerCityCounty

Report: While remote work is causing offices to empty out, walkable cities are still in high demand dlvr.it/ShVhBW

26th January 2023
AmerCityCounty

Managing landslides along road corridors using remote sensing dlvr.it/ShTpL6

26th January 2023

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”
  • Cookie Policy
  • Terms
Copyright © 2023 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.