From: "Donnie McGee"
Date: September 7, 2012 1:08:12 AM EDT
To: "C.J. O'Donnell"
Subject: ORP Update - IRS letter submitted by the State

For immediate statewide distribution:

Dear ORP Ad Hoc Committee members, chapter leaders, and ORP enrollees,

The tax firm hired to submit a Private Letter Ruling request to the IRS on the Optional Retirement Plan transfer legislation indicated that the letter has been sent and that the IRS was expected to have received it on Wednesday, 9/5/12. The letter was thoroughly vetted by MTA's tax attorneys, is comprehensive and persuasive, with a clear emphasis that the transfer opportunity would not threaten the integrity of either of the two state retirement options (the ORP or the State Employees' Retirement System - SERS).

* The tax firms for the state and for the MTA both expressed optimism that the case would be reviewed by the IRS, given the legislative mandate.
* The time frame within which such a review would take place was not specified, but the MTA will be meeting with the Department of Higher Education to pursue this further.
* The DHE has provided Katie D'Urso with MTA members who are currently active in the ORP who would be eligible for this transfer opportunity.

BACKGROUND: The state's Pension Reform Act of 2011 included a "reform" piece on the Optional Retirement Plan (ORP). This legislation would provide a one time opportunity for ORP-enrolled members to transfer to the State Employees' Retirement System (SERS). However, the implementation of this legislation is conditioned upon a favorable review of this transfer plan by the Internal Revenue Service (IRS).

* Note this legislation would affect 3,000+ active ORP enrollees, most of them higher education faculty at the state's 29 public colleges and universities.
* See the attached timeline for a better understanding of the implementation of the provisions in this ORP legislation (often referenced as "Section 60").

What's Next:

* Joey Hansen, Katie D'Urso, and I will be meeting with the DHE and the State Retirement Board this month to get more information related to the ORP buyback formula, the support of the DHE in the implementation of the transfer of ORP assets, and the payback options for money owed for purchase of service credit. * The distribution of a FAQ sheet should take place after the above-referenced meeting.
* Regional meetings statewide will also be scheduled to discuss the details related to the legislation and the transfer implementation.

New Employee Retirement Orientation - Education is KEY:
* Should the IRS provide a favorable review of the Section 60 legislation, there will only be a time-limited one-time opportunity for employees working at the time of the state's receipt of the IRS approval. It is imperative that all future enrollees understand the details of both retirement options before they enroll. * Eligibility for the ORP has expanded; it now includes faculty, professional staff, and other public higher education employees.
* The enrollment period has been extended from 90 to 180 days, as per the state's Pension Reform Act (as of 2/14/12).
* Advise new members to see a financial advisor and review all links under "Choosing a Retirement Plan" on the state's ORP website: http://www.mass.edu/test/foremployees/orp/chooseintro.asp

Thanks to all of you for your patience. I know this has been a long, drawn-out process. I'll be in touch when we have more news.

Best, Donnie Diana (Donnie) McGee
MCCC Vice President & SAC Chair
MTA Board of Directors
vice-president@mccc-union.org
Cell: 508-415-1513