Peter Gulia

I don’t know the answer to BG5150’s further question. But even if a change might have been a cutback, that wouldn’t excuse having the plan’s governing document truthfully state what the plan provided.

The originating post’s description of the facts is that the plan’s sponsor “did not want to allow CRDs”, and might have provided something until it revoked whatever implied assent might have been set up by not promptly reacting to its recordkeeper’s notice. If the plan’s sponsor ended its plan’s provision for a coronavirus-related distribution before tax law’s allowance for such a provision expired, the eventual plan amendment might truthfully state what had been provided.

I vote for your idea. If one uses IRS-preapproved documents and falls into the IRS’s remedial-amendment regime, eventually some document states what the plan’s sponsor and administrator (typically, the employer) treated the plan as having provided. And that document should follow what was assumed to have been provided. So: From {the date the implied assent became effective} to {the date the plan’s sponsor revoked the implied assent}, . . . .

A plan’s governing document might be good-enough without a change. I’ve seen plan documents from as long ago as the 1970s that did not restrict the word spouse. If the plan needs no restatement or amendment for any other point, the plan’s sponsor or its advisor might read the current governing document. If nothing in it improperly narrows the meaning of spouse, there might be nothing that needs a change.

If the worker can find or borrow enough money to pay the initial payment the landlord calls for, might she fail to pay rent until the landlord delivers an or-else eviction notice? Would that set up a recognized need for “[p]ayments necessary to prevent the eviction of the employee from the employee’s principal residence”? I do not recommend this. Rather, it illustrates one of the many absurdities in this bit of tax law.

One imagines the corporate-communications writers thought carefully about how to not use the five-letter word that is the airline's business name.

"Delta Takes Tough But Legal Stance in Vaccine Plan, Lawyers Say" Delta Takes Tough But Legal Stance in Vaccine Plan, Lawyers Say (bloomberglaw.com)

I too say don't appease, at least not for the Form 5500 processing mentioned. My observation was much more general about how defects in government forms and systems push lawyers and other advisors to advise clients about the bad consequences of correct reporting. While a decent advisor doesn't advise a client to make a false or misleading statement, one may give full-picture advice about consequences. It's sad that an advisor sometimes is pushed to render that kind of advice. It's even worse that sometimes a client is pushed to consider incorrect reporting as a way to not suffer bad consequences from a government's broken systems.

I hate (much more than most practitioners) giving in to the weaknesses of governments’ systems. But the problem of government forms and systems being unable to handle correct reporting of proper information has become severe. And it’s a problem of national, State, and local government functions. Some of these problems have real consequences. (But I'll end my rant here.)

Assuming the discontinued plan otherwise is one for which the plan’s administrator must file a Form 5500 report, I’m unaware of an exception that would apply because the count of participants is few, even as few as one. A plan isn’t ended until all counts and amounts are zeroes.

Yes. Thank you very much!

JonC, thank you for your excellent information. If I may ask a little more: Does the wideness or narrowness of a guarantee vary with how much the recordkeeper wants to get or keep the customer? For example, does a mega or large plan get a wide guarantee, while a micro plan is offered only a narrower guarantee (or none)? For a lockout after an address change or other risk-introducing event, how many days elapse or what fact or condition must change to end the lockout?

What does one report on Form 5500 if—with no merger of a plan into another plan—a business acquirer assumes obligations to maintain a plan that had been sponsored and administered by the acquired business? Is it anything more than what thepensionmaven describes, including about item 4? (I’m aware that with most acquisitions the acquirer does not assume the acquiree’s plan. But there must be at least some.) Even if one accepts the chore of tricking the IRS’s defective computer systems, one might be reluctant to do a or b alone because either makes an untruthful statement (and does so under penalties of perjury). If a client chooses to appease the IRS with b, one might add an attachment to explain that the plan is not a new plan and the report is not the first report.

TommyGunn13, thank you for adding your helpful information.

MoJo, thank you for your good and helpful information. I am less confident that recordkeepers’ standard service agreements differ. Many refer to taking “commercially reasonable” steps; but that does little more than invite an expensive argument about what that phrase meant. A few refer to one or more of SPARK’s Industry Best Practices, but those are so wide and conceptual that almost anything could be argued to meet them. I haven’t seen any standard service agreement state obligations in a way that would support independent testing of whether the recordkeeper met or breached its obligation. Perhaps that’s because there is no set of generally recognized standards. And revealing too much about methods weakens their security and control. Although one might want fiduciaries to seek more than EBSA suggests, I suspect many fiduciaries (at least those with smaller plans) can’t meaningfully do even as little as EBSA suggests. Do others have different or further observations?

Plenty of advisors are preaching to retirement plans’ fiduciaries (mostly, employers) that they ought to do something about cybersecurity. Imagine an employer takes heed, and tries to follow EBSA’s Tips for Hiring a Service Provider with Strong Cybersecurity Practices. https://www.dol.gov/sites/dolgov/files/ebsa/key-topics/retirement-benefits/cybersecurity/tips-for-hiring-a-service-provider-with-strong-security-practices.pdf Step 6 is about what a fiduciary should seek to include in (or delete from) a service provider’s contract. It includes a list of five or six provisions a fiduciary should seek. But is this realistic? Imagine a plan’s size limits its negotiation with a recordkeeper to engaging it (on its standard terms) or not. For the points the EBSA guidance mentions, are there meaningful differences in what recordkeepers offer? Or are recordkeepers’ provisions so much in a common mainstream that there’s nothing much an employer would compare?

Consider whether a discontinued plan’s administrator (often, the same organization as the plan’s sponsor) might send a revised summary plan description or summary of material modifications in the same delivery as the notice of the final distribution, including its Internal Revenue Code § 402(f) eligible-rollover-distribution notice (if any).

C.B. Zeller, thank you for helping us clarify. A provision of the kind I described often had an exception for an involuntary distribution, including a distribution on normal retirement age or to meet a minimum-distribution provision. But it might fit for a participant-requested distribution. EBECatty, if the participant has not furnished needed information by the time an involuntary distribution is required, a plan’s administrator might have little or no choice but to delay a distribution until the distributee is sufficiently identified. But I would not forfeit the participant’s otherwise non-forfeitable benefit unless doing so is needed to complete a terminated plan’s final administration.

In the 1980s, some plans’ documents set furnishing necessary information as a condition for a distribution. Clauses of that kind described necessary information as whatever the plan’s administrator or trustee needs to apply the plan’s provisions and obey law. Some further described as a non-exhaustive illustration that this includes furnishing one’s name, address, date of birth, and taxpayer identification number. Do IRS-preapproved documents include something like that?

The text you quote is about what information an application for the IRS’s written determination on a § 401(a) plan (or a plan described in § 403(a)(1)) must include if the applicant wants the determination to consider the effect of § 414(n). There is no such written determination one could get for a § 403(b) plan. The answer you point to is consistent with the answer in Q 1:12 of 403(b) Answer Book.

Even if the participant might sue for her benefit, shouldn’t a court readily find that it’s reasonable for a plan’s fiduciaries to require information to the extent needed for the fiduciaries to obey public law?

No one should tax-report using an identification number known to be false. The participant may apply for a U.S. taxpayer identification number. https://www.irs.gov/forms-pubs/about-form-w-7 Internal Revenue Code of 1986 (26 U.S.C.) § 6103 limits the uses of taxpayer information. The administrator or payer should get the distributee’s address, to support tax-information reporting and withholding for taxes, including not only Federal income tax but also State and local income taxes (at least to the extent of jurisdiction over the plan’s trustee or its payer).

Before sorting out tax-information reporting, What evidence must or should a plan’s administrator collect and evaluate to consider whether a claimant is the same person as the participant with a different name and taxpayer identification number?

Even if the pre-approved document has no checkbox or fill-in line for this, a Revenue Procedure mentions “the resignation or replacement of fiduciaries” as an example of an administrative provision an adopting employer may add without losing reliance on the IRS’s opinion letter.

I enjoyed talking with Professor Jon Forman between our presentations to the ERISA Scholars Employee Benefits/Social Insurance Conference. A gentleman, from whom we learned ways much more important than how to make and use law.