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under the IRS voluntary compliance program. The third step to be followed is a follow-up <br />determination letter application with the IRS. He said the letter application is a process <br />where a plan is submitted to the IRS for review, and the determination is required when <br />you opt to participate in the voluntary compliance program and also to insure the plan is in <br />compliance. If the plan is not compliant, the taxpayer, including the governmental entity, <br />can rely on the determination letter and would not be subject to any sanctions for non- <br />compliance, if the IRS reviewed the plan and approved it. Mr. Mug said there is a deadline <br />for submittal of the determination letter which is the end of January. <br /> <br />Mr. Sharpe asked what Mr. Mug’s referred to when he mentioned five years. Mr. Mug said <br />the IRS adopted a cycle program of governmental filing and we are presently in the fifth <br />year of the cycle program. <br /> <br />Mayor Welsch asked if there was any penalty for being out of compliance. Mr. Mug stated <br />there was a compliance fee that had to be paid, which is essentially a penalty to the IRS. <br />The fee is based on the number of participants in the plan and he thought the fee was <br />$5,000 for each plan. In addition to the $10,000 there is a $2,000 fee for both plans for the <br />IRS to review and issue the determination letter. Mayor Welsch asked if there was <br />something the City could do so they would stay in compliance. Mr. Mug said as long as <br />his firm is working with the City, they will advise when amendments are required for all <br />pension plans to stay in compliance. He also advised the Board to subscribe to an IRS <br />newsletter for plan sponsors that the IRS issues periodically to keep them informed. <br /> <br />Mr. Mug said that there has not been a single governmental plan out of twelve that his firm <br />has worked with over the last two years that were in compliance. <br /> <br />Diane Sher stated that it is the Board’s intention to set up a cycle for review. <br /> <br />Mr. Glickert asked for confirmation that there was nothing substantive in the changes <br />made. Mr. Mug agreed. <br /> <br />The study session was adjourned at 5:57 p.m. <br /> <br />Joyce Pumm <br />City Clerk <br /> <br />