Last Chance to Send Comment Letters!

Comment letters to the IRS must be sent (and preferably received) by Friday, June 28. If you haven't submitted your letter yet, please do so! Feel free to use our comment letter templates.

2002 Tax Form Reveals... an ERISA Plan

A leaflet that has recently been distributed at the hospital (not created or distributed by us) reproduces a very interesting tax form filed by Saint Peter's in 2002. We understand the form was obtained under the Freedom of Information Act and is public.

In February 2002, Saint Peter's filed IRS Form 5300, "Application for Determination for Employee Benefit Plan." Saint Peter's had evidently made a change to the Plan document and submitted this form to the IRS along with the revised document. The form is a request for the IRS to issue a letter confirming that the revised plan still qualifies for favorable tax treatment; that is, that it complies with the requirements imposed by federal tax law, including ERISA.

Note that in answering Line 7, "type of plan," Saint Peter's bypasses all the special cases – including "nonelecting church plan (i.e. an election under section 410(d) has not been made)" – and selects "other." In other words, Saint Peter's, in 2002, states to the IRS that the plan is not what they now claim it has been since 1974. The form jibes with former Saint Peter's CEO John Matuska's statement that throughout his 24 years on the Retirement Plan Committee (1977 to 2001) the Plan was always considered – in fact was – an ERISA plan, never a church plan. It contradicts most recent statements by Saint Peter's management about the status of the Plan since 1974.

The hospital claims that all such evidence, and indeed their entire thirty-two-year history of managing the Plan as an ERISA plan, is not relevant now. Since they now claim to have always been effectively a church (for pension plan purposes only), and since they never submitted a document stating that the plan was a church plan which elected to comply with ERISA, they claim that the Plan has always been a non-electing church plan. In their view, it doesn't matter that the actual reason such a document was never filed is because the hospital never considered itself a church – until 2006, once the benefits consultants got their hooks in.

We continue to be disappointed by Saint Peter's management, who must hide behind lawyerly word-parsing to support their claims, rather than acknowledging objective reality and talking straight as people do. The pending class-action suit should help decide whether the Plan's long history as an ERISA plan can be erased by a slick argument. In the meantime, your IRS comment can help draw attention to this evasion.

A gentle reminder: your comment letter to the IRS must be submitted by June 28!

Is the Tide Turning?

We may be witnessing a significant shift in the IRS's stance on the "church plan" issue, according to a recent article in Pensions & Investments magazine. It begins, "The IRS' long-term trend of allowing church-affiliated defined benefit pension plans to be exempt from federal pension rules could reverse course after an unusual decision by the agency and a flurry of lawsuits." You can read the article here. The article covers the IRS' recent decision to revoke the church plan status of Hospital Center at Orange, and the multiple ‒ now counting five ‒ class action lawsuits recently filed against Catholic hospital conglomerates including Saint Peter's. One lawyer quoted in the article opines that the IRS may delay further church plan decisions until the lawsuits are resolved. We shouldn't count on this. Take advantage of the golden opportunity granted by Saint Peter's re-application for church plan status to make your voice heard: submit a comment letter by the June 28 deadline, and convince your fellow employees and retirees to do the same.

Saint Peter's will be holding town hall meetings this coming Thursday and Friday, June 6 and 7, to discuss its new SPIRE strategic plan; the meetings will be chaired by Saint Peter's COO Kenneth Sable. Administration states that "employees are urged to ask questions" and that questions can be submitted in advance via a "question submission box." It's unclear if any questions not submitted via the box will be addressed. It's also unclear whether any of Saint Peter's administration responsible for the pension plan (CEO Rak, CFO Stoldt, or VP of HR Ballesteros) will attend. Still, if you attend one of these meetings and any of the above individuals are present, it may provide an opportunity to ask questions about the pension plan in a public forum. Clearly, the administration would rather address pension questions in private. If you or someone in your meeting asks a pension-related question, kindly let us know in the comments how it went. Thanks!

Site Update

We've given the site a minor but much needed and long-overdue update. Specifically, we've taken two older posts, updated them and given them a permanent home on the site.

• Your Pension At Risk is a short summary of the issue and an introduction to the site.
• "Church Plan" Timeline provides a history of the Saint Peter's Plan and how it fits with the history of the "church plan" exemption.

The timeline, in particular, has been extensively rewritten and should be very useful in understanding the issues at hand. We plan to keep these pages up to date going forward.

Less than one month remains to send comment letters to the IRS. Please spread the word to your fellow employees and retirees!