Proposed IRS Ruling Regarding Charter School Employee Participation in State Retirement Systems

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January 29, 2015 This week, the Internal Revenue Service (IRS) and Department of Treasury issued guidance regarding specific rules they are considering that relate to whether a State retirement system that covers employees of a charter school will fall within the meaning of a "governmental plan" under IRS laws.

As you may recall, the California Public Employee Retirement System (CalPERS) changed its application process for charter school applications to their retirement program after the IRS released an Advance Notice of Proposed Rulemaking around this issue in November of 2011. CCSA has been working closely with CalPERS since their board took action to implement this new policy, which adversely effected charter schools and their options in choosing a retirement system for their employees.

Based on CCSA's initial review of the newly issued IRS guidance, we believe that it adequately clarifies that charter school employees in California may still participate in public retirement systems, including CalPERS. We look forward to working with CalPERS on this issue and we will keep you updated about whether this guidance affects changes in their policy and applications for new charter schools.