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Update November 4, 2002

Treasury to Delay Effective Date of Minimum Distribution Temporary Rules (MDTR)

            Officials of the Department of the Treasury said on November 1 that they will delay the effective date of the MDTR. The rules interfere with retirees’ COLAs in certain states as well as create other problems.  They are effective January 1, 2003.  The officials announced the delay in a meeting attended by NCTR, NASRA, NCPERS, and other public plan representatives.

            The officials said the delay will be in effect until further notice.  They do not know when they will publish details, but hope to do so within a month.  The delay gives NCTR members a reprieve from addressing the rules at the present time. 

            During the meeting, public plan representatives advocated the exemption of governmental plans from the rules.  No resolution with the Treasury officials was reached.  The officials did note, however, that they are aware of the various concerns about the rules.  For example, the rules do not permit COLAs with a fixed percentage increase nor those based on investment returns.  They also do not allow certain types of survivor options currently used by some public plans. 

            At the conclusion of the meeting, the Treasury officials and public plan representatives discussed the possibility of some way to grandfather existing plan structures, but did not go into any specifics.

            The delay coupled with Treasury’s openness to discuss public plan concerns is encouraging given how problematic the rules are.  I will keep you posted on developments.