City of Troy says IRS is ending decades-old incentive plan for firefighters

Posted at 11:17 PM, Jan 20, 2023
and last updated 2023-01-21 01:26:44-05

TROY, Mich. (WXYZ) — With more than 140 volunteers across the city ready to respond at a moments notice, Troy has a unique fire department. It's said to be the largest volunteer combination department in the state and one of the largest in the country.

Members past and present take pride in that.

“It's a second family is what it is,” retired firefighter John Milliron said.

Milliron is one of those past members, spending 28 years at Station 2. When he retired, he was enrolled in the department’s incentive program, saying he signed a paper agreeing to monthly payments.

“(The paper) that I signed was a set amount and at the very end said 'for life,'” Milliron said.

But last week, Milliron and other retired firefighters learned those monthly payments will be coming to an end, and current firefighters were presented with a draft of a new plan that was going to be created.

“Well, there’s some frustration that we were not involved in the process, there's some frustration that we found out the way we did,” said Capt. Patrick Durham with the Troy Fire Department.

When Durham isn’t working as a mechanical engineer, he’s a captain at Station 4. He's also a member of the incentive plan board and says the plan worked similar to a pension, with incentives for 10 years of service and beyond.

“It's a great tool for retention, it keeps people on," Durham said. "I know for myself I had some job changes. I was working in Plymouth for a number of years, and it kept me in the city of Troy.”

At the core of the issue is a battle with the IRS, which says the plan can no longer be tax exempt. The trust containing $14 million will be paid out to plan participants in lump sums of unknown amounts, which are still to be determined by an actuary. A new plan will have to start from scratch.

“We're in the process now of figuring out what that new plan is going to be. We’ve got about three months to figure it out,” Troy Mayor Ethan Baker said.

Baker says the city hired legal counsel and fought the IRS for over a year to keep the plan. A new plan that was drafted by attorneys was also just seen by city council last week, according to Baker.

“It was kind of news to us and we hadn’t had a chance to digest it either,” Baker said. "Mayor and council, we’re the ones who actually vote on it. I'm telling you right now there are opportunities for it to be improved and it’s going to be.”

In the meantime, retirees like Milliron say they didn’t sign up for the money, but they did plan their retirement around it. He says he wants more transparency as a solution is worked out.

“There's really been minimal transparency. You think maybe we could have known about this," Milliron said. “You establish a life around it like I said before, and then it’s pulled out from underneath you."

“I'm very confident we can all work together to figure out the best plan moving forward,” Baker said. “We're going to make sure the firefighters are taken care of and they’re whole. We're not going to shortchange them in any way.”