Leaderboard

How could it not? From various organizations letters to Labor and Treasury, there are many requests for technical corrections and guidance on SECURE 2.0. If those go unanswered for an extended period, practitioners end up functioning in the dark, making educated guesses, or simply not acting at all. Also, what about determination letter and plan termination filings (IRS and PBGC) that could get substantially delayed? This doesn't even consider the implications from the general economic meltdown that could happen. Any government shutdown and default would be bad for everyone, except maybe the handful of politicians whose election platforms were to blow up the economy.

People, including many politicians, are conflating a default due to hit the debt limit versus a government shutdown due to a delay in passing a budget. We've dealt with the latter before and it does cause some problems. If the former occurs, not getting IRS/DOL guidance will the least of our problems.

Undoubtedly, a shutdown would be bad news. Currently, there already are too many unanswered questions from the agencies. This is impacting the ability of software developers across the industry to design, code, implement and test modifications to support changes that are already effective. Implementation of changes effective in 2024 and beyond are in the queue but also in limbo pending guidance. Keep in mind that software changes are the tip of the iceberg of fully implementing operational changes. We can hope that the agencies are anticipating that everything the needs to be done to implement will not be completed in time and that they are developing strategies or policies that will protect plans from being considered not in compliance. An example is how the audit opinion changes on the Form 5500 were made optional for one year. There were the pandemic rules around terminations versus layoffs, temporary availability of higher limits on loans, relaxing rules on notarization of spousal consent, and more. If the probability of a government shutdown continues to increase over the next several weeks, I think the industry should be proactive in offering to the agencies suggestions and recommendations on steps that agencies can take in advance of a shutdown that will carry us through a shutdown and through a reasonable the time period afterwards. The industry did a good job helping the government in crafting and in lobbying for many of the recent legislative changes, and the industry should use its detailed operational knowledge and creativity to help design and lobby for steps to protect plans in the event of a shutdown.