Retirement Fund pushes for bill's passage

by Ken Quintanilla

Guam - The Government of Guam Retirement Fund has sought the Guam Legislature's help in ensuring its Defined Benefit Plan meets requirements for tax qualified governmental pension plans under the Internal Revenue Service code. A public hearing was held this morning on Bill 47.

Retirement Fund legal counsel Vince Camacho explained that the tax qualified designation is needed especially for thousands of retirees who live off island, among other reasons. "Without a qualified plan the IRS is subject to taxation of any of that money in addition to what they've already included in their income tax, so we don't know how the IRS is going to necessarily treat our 2,000 retirees in other jurisdictions because they fall under the IRS and not Rev & Tax. So that's one of the big reasons why because if we just have the blanket coverage any future retirees who wants to go move to the mainland there the qualified status would protect their tax liability as to the way it is now."

According to Camacho, the other danger to the defined benefit plan is that the fund doesn't pay income taxes on any of their investment gains so the danger in the future is the IRS could force unqualified plans to pay taxes on their annual investment earnings, which for the GovGuam Retirement Fund is $171 million. The legislation needs to be passed and signed by the governor by April 3 otherwise the DB plan will be automatically determined unqualified.