Pension buyouts may violate IRS rules
Wayne County pension officials are investigating whether Executive Robert Ficano’s lucrative pension plans violated federal rules and if some retirees will have to repay the system.
Pension officials have retained a law firm to investigate whether some deals violated Internal Revenue Service rules limiting annual payouts, contributions to pensions and the purchase of service time.
The investigation is probing several years of pensions, including an early retirement plan Ficano offered to employees last year.
It waived an age limit of 55 for retirees and allowed them to buy — at a discount — as many as six of 20 years to qualify for a pension. IRS rules appear to limit purchasing time to five years, said pension board members Patrick Melton and Hugh MacDonald.
The Detroit News reported Monday on several appointee buyouts, including that of Nancy Olind, a 37-year-old human resources executive, who left after 15 years with the county. She purchased five years and five months and will make $42,500 for the rest of her life.
Other appointees purchased more than a dozen years with other municipalities and qualify for separate pensions.
Ficano opened a defined benefit pension plan to county employees that guaranteed a monthly payout based on years of service and pay in late 2008 in exchange for wage and health care concessions. Many employees used their county-matched 401(k) funds to buy into the guaranteed pension.