Leaderboard

Even without a shutdown, I dont expect much in the form of rulemaking in the next 12-18 months. The 10-1 rule in a recent executive order means that agencies must repeal 10 existing rules for every new rule. Im not entirely sure what the impact is on sub-regulatory guidance, but Bondi reinstated the prohibition on "improper guidance" from the first Trump administration (which was withdrawn by Garland during the Biden administration). Under the memo, guidance is improper when issued without undergoing the rulemaking process but has a direct effect on the rights and obligations of private parties governed by the agency, or otherwise acts as a substitute for rulemaking.

Reality has arrived - we are seeing plan audits reassigned due to personnel changes at Treasury, audit appointments pushed out, and even unofficially an audit scaled back. I'm sure there will be more changes coming.

The IRS compliance questions apply to the 2024 Form 5500. While you are filing for a 2021 Plan Year, you are filing a 2024 Form 5500. You need to complete the questions.

The FY2025 Lapsed Appropriations Contingency Plan was released in July 2024 to have an orderly plan for coping with the ploy of letting government funding lapse in an effort to further a political agenda. The plan anticipated that this ploy will become very much commonplace and the plan codifies steps to take for an orderly shutdown and then an orderly restoration of activities. Effectively, the plan anticipates that funding ultimately will be restored, paychecks will be issued covering lost pay, staff will return and pick up where they left off. Oversimplifying things, the plan basically puts the agency into hibernation. We are now in 2025 and are in the midst of an aggressive Reduction in Force initiative to permanently eliminate certain staff, to permanently stop funding certain initiatives, and to impose permanent limitations on staff and budgets for those who choose to continue working. In complete contrast to the Contingency Plan, a goal of the current actions are not to restore staff and budgets. Aspects of our business that will be impacted the most by these reductions is unknown. Our industry works with our professional counterparts in the IRS who have in depth knowledge of our shared interests and concerns. The RIF is being conducted almost solely based on headcount without regard to each individual's role or knowledge base, and without regard to funding of certain initiatives. Depending of what we may need as feedback from the IRS or what we may wish to provide as input to the IRS, the interaction could range from business as usual where our contacts remain in place and in their roles, to a complete shut down as our contacts are no longer employed and as the IRS stops funding certain initiatives. All of this makes the Contingency Plan seem like marvelous fantasy.

Without having read the report, just on general principles I'd say: Stopping examinations is a bad idea. There has to be some level of enforcement threat to attempt to keep the bad players from running amok, with the rest of us picking up the tab. And, rulemaking/interpretive guidance is also a necessary (if sometimes unwelcome) function. Look at all the SECURE/2.0 etc. confusion that requires guidance, just as one example.