May 2026 Fire Relief Association Newsletter

On May 19, Governor Walz signed the 2026 Omnibus Pension and Retirement Bill into law. All of the Fire Relief Association Working Group proposals were included in the bill, plus some additional changes affecting relief associations that were initiated by other groups or organizations. The bill:

• Increases the audit threshold for relief associations from the current $750,000 to $1 million in either special fund assets or liabilities, for consistency with thresholds for other types of local governments. The audit threshold increase goes into effect on December 31, 2026, and applies to audited financial statements for calendar year 2026 and thereafter (i.e., audits filed with the OSA next year).
• Allows relief associations that drop below the audit threshold to revert to an agreed-upon procedures engagement, instead of continuing to have an annual audit required.
• Rewrites and clarifies provisions governing service credit for firefighters who resume active fire department service after retirement or a break in service.
• Updates definitions to include service performed by volunteer emergency medical personnel.
• Clarifies how benefits are calculated when a relief association dissolves and terminates its retirement plan. References to using the “present value” to determine lump sum benefit amounts were removed from statute, providing relief associations with options on how benefits can be calculated when a plan is terminated.
• Creates a temporary work group led by the LCPR Executive Director for the purpose of recommending legislation to shorten the vesting schedule for relief associations to a maximum of ten years and to require that relief associations include volunteer or paid on-call emergency medical providers as members on the same basis as firefighters.

Later this year we will provide information to relief associations impacted by the audit threshold change. In the meantime, if you have questions about any of these legislative changes, please contact our Pension Division team.

Reporting forms for all relief associations are due to the OSA by June 30. See our Reporting Update for links to updated training videos and instructions for completing the forms.

Relief associations with at least $750,000 in either special fund assets or liabilities must submit an audit report with their reporting forms, while those with assets and liabilities both below the threshold may submit an agreed-upon procedures (AUP) report with their forms instead of an audit. We've posted a document on our website listing each relief association and whether an AUP report or audit report is required to be filed with us this year.

The 2025 Minnesota Legal Compliance Audit Guide for Relief Associations prescribes the minimum procedures and audit scope for relief association audits, while procedures and sample reports for CPAs conducting AUP engagements are also prescribed by the OSA.

A new training video is available that walks through the Home and Active tabs of the redesigned Schedule (SC) Form for relief associations with a defined benefit lump-sum plan.

Additional training videos showing how to complete relief association reporting forms can be found on the Training Opportunities page of our website. Scroll down to the “Pension Division” heading and find the videos under the “SC Form Series” and “FIRE Form Series” headings.

Beginning January 1, 2026, relief associations with a defined contribution plan are allowed to provide retirement distributions as soon as practicable following a firefighter’s separation from service, instead of requiring the firefighter to be at least age 50. Relief associations with a defined contribution plan that would like to allow earlier distributions must amend their bylaws to reduce or remove the required minimum retirement age. Additionally, if a relief association intends to allow members who are currently deferred to receive their distributions prior to age 50, the bylaws must be amended to specifically apply to them, too.

The OSA’s sample Bylaw Guides can be used as a resource for defined contribution plans looking to amend their bylaws to provide benefits at an earlier retirement age. See Article VII of the defined contribution Bylaw Guides for sample language that reduces or eliminates the required minimum retirement age and for options about whether the changes apply to currently deferred members, or only to members who have not yet separated from service.

Relief association members electing to receive a retirement benefit prior to age 50 should consult with their tax or financial advisor about any tax penalties that may be incurred if the benefit is not directly rolled over.

Note that firefighters in defined benefit plans must still be at least age 50 to receive a retirement benefit distribution. If you're not sure which plan type you belong to, see topic 5 below.

Relief associations can either provide a defined contribution retirement plan or a defined benefit retirement plan. A defined contribution retirement plan, also known as a “split-the-pie” plan, provides a retirement benefit equal to the member’s individual account balance at the time of retirement. Members of defined contribution plans receive equal shares of state and municipal contributions and prorated shares of investment earnings. Individual member account balances vary from year to year based on investment performance, revenues, and expenses, and members usually receive benefits as a one-time lump sum payment.

Most relief associations provide a defined benefit retirement plan, with benefits also usually distributed as a one-time lump sum payment. A defined benefit retirement plan provides a retirement benefit based on a formula (length of service x benefit level x vested percent). Benefits are primarily funded through a combination of fire state aid, municipal contributions, and investment earnings. When revenue from one of these funding sources decreases, pressure may be put on the other funding sources to make up the difference. If a relief association experiences investment losses, for example, a municipality may need to increase its contributions to the relief association so that benefits are sufficiently funded.