Peter Gulia

For a 401(k)-style retirement plan to get recordkeeping services at Vanguard (not Ascensus), what size and other conditions must a plan meet? Any anecdotal information would help me. Thank you for your neighborly help.

Just as a participant’s account can include rights that are not yet nonforfeitable, an alternate payee’s account might include rights not yet nonforfeitable. (I recognize that a plan administrator’s service provider might lack software to apply a forfeiture to an alternate payee’s segregated account. One might need to use other methods.) I recognize the idea is unwelcome and impractical for everyone involved. I mention the idea only because some divorcing spouses and their advisers encounter difficulty in negotiating a value regarding not-yet-vested ESOP rights, which involve at least two layers of contingencies. If an alternate payee’s segregated account gets some still-forfeitable rights, the alternate payee bears the risk that the participant severs from employment before those rights become vested. (The alternate payee bears a further risk if a right becomes vested but is not distributable.) I don’t doubt that most people negotiate a division that provides an alternate payee’s portion only from nonforfeitable rights, maybe leaving forfeitable rights with the participant. But now I’m curious: Ignoring ESOPs and considering readily divisible daily-valued account balances, what division do divorcing spouses negotiate when the participant’s account has only forfeitable balances? (For example, imagine the participant made no elective deferral, the employer made nonelective contributions, those are burdened by five-year cliff vesting, and neither of the divorcing spouses wants to wait until the vesting condition is met.)

Some individual-account retirement plans lack complexities like providing delays on when a participant’s accruals become nonforfeitable. And many plans are designed to allow an immediate QDRO distribution no matter that the participant yet has no currently exercisable right to a distribution and is young. These provisions and daily measures of accrued individual-account balances have resulted in many domestic-relations lawyers getting less experience in thinking about how to divide or value rights. But dividing rights under an ESOP, especially if the employer securities are untraded (and more so if the corporation has a power to redeem shares regarding an individual who no longer is an employee), involves understanding rights and conditions under the plan. About how divorcing spouses deal with an employee stock ownership plan: Have you considered writing a DRO that would deliberately separate division and payment functions? An order’s division of rights in an ESOP might be grounded on the division of marital property the litigants negotiate or the domestic-relations court finds. A DRO’s division might set over to the alternate payee’s segregated account a portion of ESOP rights that includes rights that have not yet become nonforfeitable. An order might allow its alternate payee choices, subject to the plan’s provisions, about how quickly or slowly the alternate payee claims distributions from the alternate payee’s segregated account. An alternate payee might wait for a transferred ESOP right to become nonforfeitable. And, if even a vested right is not immediately distributable, an alternate payee might wait until the participant attains the ERISA § 206(d)(3) earliest retirement age. This is not advice to anyone.

If it’s unclear or uncertain whether a report or return ought to be on Form 5500-SF or 5500-EZ, consider asking EBSA’s Office of the Chief Accountant. While any response you might get doesn’t bind any government agency (or protect against a participant’s, beneficiary’s, or alternate payee’s claim), making a record of having asked might be some evidence of a good-faith effort to pursue an answer. Also, an inquiry might help EBSA spot a need to improve the instructions. This isn’t advice to anyone.

Just curious: Does the plan your client might submit a DRO to furnish a suggested form? Many plans’ administrators and their service providers furnish, at least to lawyers, a “model” form for an order likelier to get the plan’s QDRO approval. While employee-benefits lawyers differ on whether a plan should furnish a model, some suggest it as a way to help protect a plan’s administration from difficulties and expenses that would result from responding to judges and lawyers less knowledgeable and less capable than you. Likewise, many service providers furnish a model to lower the operating expenses of a DRO-review service. While you wouldn’t limit your work to following a plan’s model, sometimes reading the particular plan’s model reveals what kinds of divisions or payment commands likely would result in a denial that an order is a QDRO. If you don’t find a model from the plan or by other means, consider Wolters Kluwer’s VitalLaw, Thomson/West’s Practical Law, or Lexis’ Practice Advisor. This is not advice to anyone.

A no-reading problem is common not only in domestic-relations courts but also in retirement plans’ administration. In some circumstances, a lawyer’s deliberately incomplete work might be proper, if the lawyer and her client have a carefully arranged understanding about the scope of the lawyer’s work. Likewise, there can be circumstances in which a plan administrator’s, DRO administrator’s, claims administrator’s, or other fiduciary’s responsibility to a retirement plan might make less-than-perfect administration a prudent balance of competing fiduciary duties. Hard choices of those kinds are not unique to domestic relations or employee benefits. This is not advice to anyone.

This might have the makings of a neat software tool. I can imagine a few kinds of potential licensees: A law firm that’s not an employee-benefits boutique and has only a thin employee-benefits practice might use this tool for a first-cut analysis so the firm doesn’t put in too much time (maybe more than the client will pay for), and can focus on the more difficult questions. A service provider asked for, or seeing a need for, a § 414(b)-(c)-(m)-(n)-(o) analysis in circumstances under which the service provider must pretend not to give tax or other legal advice. A service provider might describe the tool’s report as preliminary information assembled for its customer’s lawyer’s convenience—even if the service provider internally imagines it’s unlikely its customer would ask a lawyer. A service provider that considers its own liability exposure or a business-reputation “why didn’t you tell me” risk because its customer maintained a plan without advice about which businesses form the § 414(b)-(c)-(m)-(n)-(o) employer. You’d want to think through all the many sales, operations, and other business challenges. You’d need to protect your intellectual property. You’d want conspicuous and clear warnings that the tool doesn’t produce a reliable conclusion (even if you think it does). You might restrict sales to law firms, accounting firms, TPAs, recordkeepers, and other service providers you vet. A sale directly to an end-user plan sponsor or employer might increase your risks about the unlawful or unauthorized practice of law. When you’re ready to sell the tool and hire workers for that business, help the Bakers by advertising on BenefitsLink! This is not advice to anyone.

DSG, לְשָׁנָה טוֹבָה תִּכָּתֵב וְתֵחָתֵם. I’ll reply only to your query about whether a QLAC purchase under an employment-based retirement plan requires a participant’s qualified election with the participant’s spouse’s consent. From context, I guess your query is about an individual-account (defined-contribution) retirement plan that is ERISA-governed; provides participant-directed investment; is subject to ERISA § 205 [29 U.S.C. § 1055] and ERISA § 206(d)(3) [29 U.S.C. § 1056(d)(3)]; states survivor-annuity, qualified-election, and spouse’s-consent provisions no less than ERISA § 205 commands (and to meet Internal Revenue Code § 417’s tax-qualifying conditions); and states at least ERISA § 206(d)(3)-required provisions to follow a qualified domestic relations order (QDRO). If an individual-account retirement plan allows a participant to direct investment in a QLAC: The portion a participant directs to be invested in a QLAC is subject to the plan’s survivor-annuity provisions (ERISA § 205 and Internal Revenue Code § 417) when the annuity becomes irrevocable. (By contrast, if the annuity contract provides a right to surrender the contract for a cash-surrender value and reinvest the amount under the retirement plan’s other investment alternatives with that account balance subject to the plan’s nonannuity ERISA § 205 100% death-benefit protection for a surviving spouse, a plan need not require a participant’s qualified election with the participant’s spouse’s consent until the deferred annuity becomes irrevocable.) Unless needed survivor-annuity benefits are subsidized or otherwise sufficiently provided, a QLAC does not meet a plan’s ERISA § 205 survivor-annuity provisions—even if the deferred annuity would, but for its annuity starting date, be otherwise a qualified joint and survivor annuity. Consider how that’s so if the participant’s death before the QLAC’s annuity starting date could result in the participant’s spouse not getting survivor-annuity protection for the period before the QLAC’s advanced-age annuity starting date. Thus, a participant’s direction to invest in such a QLAC requires the participant’s ERISA § 205 qualified election with the participant’s spouse’s consent. See, IRS, Application of survivor annuity requirements to deferred annuity contracts under a defined contribution plan, Rev. Rul. 2012–3, 2012-8 I.R.B. 383 (Feb. 21, 2012) (law, analysis, and holding for assumed facts situation 3), available at https://www.irs.gov/pub/irs-irbs/irb12-08.pdf. Under Reorganization Plan No. 4 of 1978, the Treasury department, including its Internal Revenue Service, has interpretive authority for ERISA § 205. Reorganization Plan No. 4 of 1978 (Aug. 10, 1978), reprinted in 43 Fed. Reg. 47713 (Oct. 17, 1978), 92 Stat. 3790 (1978), Pub. L. No. 98-532 (Oct. 19, 1984) (ratifying the reorganization plan), 98 Stat. 2705 (1984), as amended Tax Reform Act of 1986, Pub. L. No. 99–514, § 2 (Oct. 22, 1986), Pension Protection Act of 2006, 100 Stat. 2095; Pub. L. No. 109–280, title I, § 108(c), formerly § 107(c) (Aug. 17, 2006), 120 Stat. 820, renumbered § 108(c), Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, Pub. L. No. 111–192, title II, § 202(a) (June 25, 2010), 124 Stat. 1297, 5 U.S.C. app., 29 U.S.C. § 1001 (executive documents under editorial notes), available at https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/executive-orders/4, at § 101. A retirement plan and annuity contract could be designed to protect a spouse’s ERISA § 205 rights such that a participant’s direction to invest in a QLAC would not require a qualified election with the participant’s spouse’s consent. But those provisions might defeat a purpose your hypothetical describes. If a QLAC annuity purchase is not completely irrevocable because the contract allows a cash surrender or other undo feature, consider whether a qualified domestic relation order can command that the participant’s right be exercised, putting an amount in a nonannuity account balance available for a QDRO division. If so, a QDRO distribution to a participant’s spouse or former spouse might be provided as soon as the participant’s ERISA § 206(d)(3)(E)(i) earliest retirement age (no later than the participant’s age 50, even if the participant then could not get a distribution. Or, a plan might allow a QDRO distribution without waiting for an earliest retirement age. See I.R.C. (26 U.S.C.) §§ 401(a)(13)(C) (flush language), 414(p)(9); 26 C.F.R. § 1.401(a)-13(g)(3), § 1.403(b)-10(c); H.R. Conf. Comm. Rep. on Pub. L. No. 99-514 (Tax Reform Act of 1986), 99th Cong., 2d Sess. II-858 (1986); IRS Ltr. Rul. 88-37-013 (issued June 7, 1988). Remember the BenefitsLink neighbors’ RTFD admonition to Read The Fabulous Documents. That includes not only documents governing the plan but also the annuity contract. This is not advice to anyone.

That some employers might encounter difficulty in engaging service providers for needed tasks (or in overseeing service providers) is among reasons some employers have resolved, so far, a go-slow on adopting a § 128 plan. Yet, some law firms are writing plans. And some service providers offer to collect some elements of needed information and inform a service-recipient employer about those. These services are not yet so established that there is a ready market convenient for an employer that lacks time and attention to devote to establishing a plan and arranging needed services.

I suspect ESOP Guy is right that enough retirement plans (not just some ESOPs, but some others too) lack a December-close valuation that it’s worthwhile for an IRS publication to explain the measure for determining a minimum distribution. ESOP Guy’s illustration shows how a valuation date to measure a calendar year’s minimum-distribution might precede the end of that year by 23 months or almost two years. Also, that a year’s minimum-distribution amount often might be determined regarding a valuation not the most recent valuation. Further, the IRS might explain that the measure is not merely the individual’s non-Roth account balance on the applicable valuation date but that balance adjusted for some contributions, allocations of forfeitures, and distributions after the valuation date but in the valuation calendar year (not necessarily a plan-accounting year). 26 C.F.R. § 1.401(a)(9)-5(b)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-5#p-1.401(a)(9)-5(b)(2).

Even for a plan not ERISA-governed, Labor’s rule about when a participant contribution becomes a plan asset is relevant for determining whether there was an Internal Revenue Code § 4975 prohibited transaction.

Whether the person that has power to elect or appoint the retirement plan’s trustees may add another cotrustee, or the trustees may authorize an agent to act for the trustees, or the plan’s governing documents might put a distribution-approving function in the plan’s administrator’s responsibility, and the administrator might authorize people to act; turns on the preferences of the plan sponsor (which might, if needed, become expressed in an amendment of one or more of the plan’s governing documents), and, if the administrator is a distinct person, the plan’s administrator, but subject to the custodian’s agreement. A human who gets a power to instruct a custodian to pay a distribution is a fiduciary. A trustee, administrator, or other fiduciary must not appoint to, or tolerate in, a distribution-instructing role a human who has been convicted of a disqualifying crime. ERISA § 411, 29 U.S.C. § 1111 https://www.govinfo.gov/content/pkg/USCODE-2024-title29/html/USCODE-2024-title29-chap18-subchapI-subtitleB-part4-sec1111.htm. A distribution-approving person must be covered by ERISA § 412 fidelity-bond insurance. Consider also that a distribution-approving fiduciary is a cofiduciary of all other fiduciaries and might in some circumstances have fiduciary responsibility regarding another fiduciary’s breach. A decision-maker might consider whether not making it too easy to instruct a distribution might be a useful and prudent control. This is not advice to anyone.

In my view, the IRS has done a good job with the challenging task of explaining complex law in Standard English. But there are practical limits and resource constraints on meeting those challenges. So, I suggest one caution. Many unadvised people mistakenly assume one may rely on an explanation in an IRS publication. (Regrettably, some professionals, who should know better, fall into this mistaken assumption.) Nothing the Treasury department or its Internal Revenue Service has published says taxpayers may rely. The IRS instructs its employees that “Publications are nonbinding on the IRS[.]” Internal Revenue Manual 4.10.7.2.7 (IRS Publications) (Jan. 1, 2006). The U.S. Tax Court has remarked that taxpayers “rely on IRS guidance at their own peril.” Bobrow v. Comm’r of Internal Revenue (No. 7022-11), T.C. Memo 2014-21 (U.S. Tax Ct. Apr. 14, 2014) (order on motion for reconsideration, at 2) (by Judge Joseph W. Nega). See also Miller v. Comm’r of Internal Revenue, 114 T.C. 184, 195 (U.S. Tax Ct. 2000); Zimmerman v. Comm’r of Internal Revenue, 71 T.C. 367, 371 (U.S. Tax Ct. 1978). And a court has held taxpayers may not rely. Adler v. Comm’r of Internal Revenue, 330 F.2d 91, 93, 64-1 U.S. Tax Cas. (CCH) ¶ 9388 (9th Cir. Apr. 2, 1964) (Responding to a taxpayer’s argument that he relied on a statement in the IRS’s Publication 17, the court observed: “Nor can any interpretation by taxpayers of the language used in government pamphlets act as an estoppel against the government, nor change the meaning of taxing statutes[.]”). Each IRS Publication should include a warning: This Publication tries to explain law in plain language, but no one may rely on this as a statement of law. An IRS publication does not bind the Internal Revenue Service.

John Feldt: For a plan that’s not ERISA-governed, a State’s law governs whether there was a breach of the written plan or other contract. Likewise, a State’s law governs whether there was a fiduciary’s breach. For either, a State’s law govern what damages, restoration, and other equitable relief might be due. But—apart from whatever the employer might or might not owe the retirement plan—consider that, under the 1978 Reorganization Plan, the Labor department’s interpretation about when a participant contribution becomes a plan’s asset is relevant also for Internal Revenue Code § 4975 about tax-law prohibited transactions. 29 C.F.R. § 2510.3-102(a)(1), https://www.ecfr.gov/current/title-29/part-2510/section-2510.3-102#p-2510.3-102(a)(1). Jakyasar: About whether a disqualified person’s payment of an Internal Revenue Code § 4975 excise tax might be an ordinary and necessary business expense and otherwise not nondeductible, consider that a professional’s fee for reliable advice on that question might be greater than the value, in the circumstances you describe, of the deduction. This is not advice to anyone.

That the worker gets payments based on accounts receivable had me ask whether the physician is a self-employed individual rather than an employee. Is the date of the employee’s severance-from-employment determined? You’re already mindful of 26 C.F.R. § 1.415(c)-2(e)(3) (Compensation paid after severance from employment), https://www.ecfr.gov/current/title-26/part-1/section-1.415(c)-2#p-1.415(c)-2(e)(3). Even if the plan provides that the after-severance compensation counts for § 415 compensation, check whether it counts in benefit-accrual compensation—RTFD.

Now that inflation measures through August are released [https://www.bls.gov/news.release/cpi.nr0.htm], is anyone up to calculate an estimate of likely 2027 inflation-adjusted amounts for retirement plans?

Has the business organization yet filed its 2025 income tax returns? Has the individual yet filed her 2025 income tax returns? Or, is either planning toward a September 15 or October 15 due date? What does the written plan provide about when an elective-deferral contribution is due? Further, consider that, under the 1978 Reorganization Plan, the Labor department’s interpretation about when a participant contribution becomes a plan’s asset is relevant also for Internal Revenue Code § 4975 about tax-law prohibited transactions. 29 C.F.R. § 2510.3-102(a)(1) https://www.ecfr.gov/current/title-29/part-2510/section-2510.3-102#p-2510.3-102(a)(1). If there is a contract breach, fiduciary breach, or prohibited transaction to correct, a relevant State’s law might allow a reasonable measure of restoration. Or, the Internal Revenue Service might consider a use of EBSA’s calculator reasonable. This is not advice to anyone.

Is the retiring physician a self-employed individual rather than an employee? If so, might one count the physician’s compensation according to the plan’s provisions for a self-employed individual’s earned income as adjusted for the plan’s measures of compensation? Might a partner’s distribution allocable to his profits interests or income interests count in those measures? If a participant was a self-employed individual, the date of an end of deemed employment might be determined differently than for an employee’s severance-from-employment. I.R.C. (26 U.S.C.) § 401(c)(1)(B)(ii) (“The term ‘self-employed individual’ means, with respect to any taxable year, an individual who has earned income (as defined in paragraph (2)) for such taxable year. To the extent provided in regulations prescribed by the Secretary, such term also includes, for any taxable year— . . . (ii) an individual who has been a self-employed individual within the meaning of the preceding sentence for any prior taxable year.”). 26 C.F.R. § 1.401-10(b)(1) (“For purposes of section 401, a self-employed individual who receives earned income from an employer during a taxable year of such employer beginning after December 31, 1962, shall be considered an employee of such employer for such taxable year.”). 26 C.F.R. § 1.415(c)-2(b)(2) (“For purposes of applying the limitations of section 415, except as otherwise provided in this section, the term compensation means remuneration for services of the following types—In the case of [a self-employed individual] who is a[] [deemed] employee within the meaning of section 401(c)(1) and regulations promulgated under section 401(c)(1), the [self-employed individual’s] earned income (as described in section 401(c)(2) and regulations promulgated under section 401(c)(2))[.]” A retired partner might be a deemed employee (and perhaps not yet severed from deemed employment) for each year in which she has earned income. This is not advice to anyone.

Consider: Alfonso Gomar alfonso.gomar@dietrichannuity.com (610) 279-9455 https://www.dietrichannuity.com/contact-us/ https://www.dietrichannuity.com/group-annuity-products/pension-plan-terminations/

If a child-support agency (rather than the child or the child’s custodial parent) sought an order or gives a notice, a plan’s administrator might have extra reason to get its lawyers’ advice. Some fiduciaries might question the prudence of paying those lawyers’ fees from plan assets if, for one situation, both the amount involved and the risk exposure on a participant’s claim that one’s account was improperly alienated or assigned are slight. Yet, a fiduciary might find that the situation could be recurring. That might suggest needs for clarifying and strengthening the administrator’s QDRO and claims procedures to help the administrator manage claims efficiently and impartially. Those needs might be more important if a meaningful portion of the participating employers’ workers or retirement plan participants might not pay due child support. And more important if any of the plan’s administrator, trustee, or custodian is vulnerable to the jurisdiction of California, New York, or another State that tries to collect child support from retirement plans. The U.S. Labor department’s Employee Benefits Security Administration has unofficially published a view: “[I]f an alternate payee is a minor or is legally incompetent, [a QDRO] can require payment to someone with legal responsibility for the alternate payee (such as a guardian or a [person] acting in loco parentis in the case of a child, or a trustee [sic] acting as an agent [sic] for the alternate payee).” DOL-EBSA, QDROs, The Division of Retirement Benefits Through Qualified Domestic Relations Orders, Q&A 1-10, page 8 (2020), https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf). See DOL-EBSA ERISA Adv. Op. 2002-03A (June 7, 2002) (on particular State law and assumptions, EBSA interpreted the Mississippi Department of Human Services Division of Child Support Enforcement as a child’s “agent”). Some suggest that those interpretations are contrary to law. (I’m unaware of a Federal court precedent that adopts or rejects EBSA’s interpretation.) Also: “It is the view of the [U.S. Labor] department that an income withholding notice issued by [New York State Office of Temporary and Disability Assistance, Division of Child Support Enforcement] or county child support enforcement agencies (as described in your submission) as part of [New York’s] [Social Security Act] IV-D program, is a domestic relations order as defined in section 206(d)(3)(B)(ii) of ERISA.” DOL-EBSA, ERISA Adv. Op. 2001-06A (June 1, 2001). Some suggest that an executive agency’s income-withholding notice is not an order. But even if a plan’s administrator recognizes a State agency’s notice as, within the meaning of ERISA § 206(d)(3), an order and a domestic-relations order, it would not result in a QDRO distribution unless the order meets the elements and conditions for a qualified domestic relations order. Some suggest that Social Security Act § 466 [42 U.S.C. § 666] sets up some authority, independent of ERISA’s QDRO regime, for a State to collect child support from a pension or retirement plan. I do not express my thinking for or against any of the interpretations. BenefitsLink neighbors might have observations about a State agency’s efforts to seek a QDRO distribution or other retirement plan distribution to collect child support. This is not advice to anyone.

As ERISA defines a “domestic relations order”, a DRO includes an order that “relates to the provision of child support.” ERISA § 206(d)(3)(B)(ii)(I), 29 U.S.C. § 1056(d)(3)(B)(ii)(I); see also I.R.C. (26 U.S.C.) § 414(p)(1)(B)(i). A carefully written DRO might meet the elements and conditions for a qualified domestic relations order. As ever, RTFD—Read The Fabulous Documents. Although ERISA § 206(d)(3) sets up some of what the plan must provide, there also are some QDRO-related provisions a plan may include or omit. For example, some plans allow a QDRO distribution even when the participant has no right to a distribution and has not reached ERISA § 206(d)(3)(E)(ii)’s earliest retirement age; but some plans preclude a QDRO distribution if the participant has not reached that earliest retirement age. A QDRO cannot “require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan[.]” ERISA § 206(d)(3)(D)(i). If a plan’s only form of distribution is a nonperiodic payment, an alternate payee would need a distinct court order for each payment, specifying the amount of the payment. But ERISA § 206(d)(3) doesn’t directly preclude a State’s or Native American Indian tribe’s court from issuing as many DROs as it takes to keep consuming the participant’s account balances, including balances that result from continuing contributions. An order that specifies a payment more than the participant’s account balance is not a QDRO. The plan’s administrator ought to follow its QDRO procedure and claims procedure (except to the extent a procedure would have the administrator do something contrary to the plan, or violating ERISA’s title I). If the plan’s administrator engaged a recordkeeper’s or other service provider’s DRO-review service, check whether the service includes or excludes an order designed to collect child support. If the court order names an alternate payee other than the participant’s spouse or former spouse, check whether the DRO-review includes or excludes such an order. Communications to the participant, to a would-be alternate payee, and to an attorney or other recognized representative of either should be as the QDRO and claims procedures call for. If the plan’s administrator finds that a submitted order is not a QDRO, the administrator might want to use extra care to make the denial communication procedurally perfect. None of this is advice to anyone.

The Form 5500-EZ instructions include this: “A one-participant plan means a retirement plan (that is, a defined benefit pension plan or a defined contribution profit-sharing or money purchase pension plan), other than an Employee Stock Ownership Plan (ESOP), which: 1. Covers only you (or you and your spouse) and you (or you and your spouse) own the entire business (which may be incorporated or unincorporated); or 2. Covers only one or more partners (or partners and their spouses) in a business partnership (treating [a] 2% shareholder of an S corporation, as defined in IRC § 1372(b), as a partner); and 3. Does not provide benefits for anyone except you (or you and your spouse) or one or more partners (or partners and their spouses).” Some might read that text’s mention of Internal Revenue Code § 1372(b) as relating only to finding whether an individual is a deemed partner because she is an actual shareholder or an attributed shareholder of a business organization that actually is a corporation. Others might read that text’s mention of I.R.C. § 1372(b) as also relating to a limited-liability company that, although not a corporation, elected to be treated as an S corporation for Federal income tax purposes. Nothing in the quoted instructions directly mentions Internal Revenue Code § 318. That section is brought in to the extent the instructions apply I.R.C. § 1372(b) regarding an S corporation. Nothing in the quoted instructions directly mentions a tax-law attribution concept regarding an employer that is a limited-liability company that for Federal income tax purposes is treated as a partnership, or as a disregarded entity. The Form 5500-EZ instructions attempt to follow an incomplete Labor department interpretation about who is not really an employee, for common law rather than tax law, because the worker is a business owner. In the Labor department’s rule about whether a plan covers an employee or covers only self-employed individuals, there is no direct mention of a deemed or attributed ownership for a family member beyond a proprietor’s or partner’s spouse. 29 C.F.R. § 2510.3-3 https://www.ecfr.gov/current/title-29/section-2510.3-3. More than one interpretation about which 5500 form to file might be a plausible interpretation. This is not advice to anyone.

If a measuring-from date is in late December, isn’t 2½ months after it a date in March?

There might be more than one plausible interpretation of the Form 5500 instructions. It might matter whether the particular limited-liability company is, for Federal income tax purposes, treated as a disregarded entity, a partnership, or an S corporation. But for a limited-liability company that is not actually a corporation, a classification for Federal income tax purposes might not matter. Have you considered asking EBSA’s Office of the Chief Accountant for a view about which interpretation EBSA might prefer? Whatever might be required or permitted Form 5500 reporting: If the owner’s mother (even if she might be an attributed owner for one or more purposes) is not an actual owner and is an employee within the meaning of and to apply ERISA § 3(2)(A), the retirement plan likely would be ERISA-governed. If so, and if the plan administrator’s interpretations of the Form 5500 instructions do not point in a clear direction, might the administrator prefer a form used widely for ERISA-governed plans over a form used most often for non-ERISA plans? This is not advice to anyone.

First, read the documents of the particular retirement plan. Some plan administrators and some advisers imagine that a plan’s exclusion is identical to an exclusion Internal Revenue Code § 410(b)(3)(C) states for some purposes about whether a plan meets a tax-qualification condition. While such an assumption might often be so, or nearly so, it is not necessarily so. A plan’s provision might set an exclusion less wide, or more wide, than I.R.C. § 410(b)(3)(C)’s exclusion. To the extent that a plan expresses an exclusion about nonresident aliens by reference to terms that have a meaning under Federal tax law, consider: resident alien I.R.C. § 7701(b)(1)(A) nonresident alien I.R.C. § 7701(b)(1)(B) lawful permanent resident I.R.C. § 7701(b)(6) presence in the United States I.R.C. § 7701(b)(7) earned income I.R.C. § 911(d)(2) income from sources within the United States I.R.C. § 861(a)(3). Also, an income tax treaty between the United States and a nation in which the alien is domiciled or resides might, depending on the governing plan documents’ text, affect whether the plan excludes an individual. In some circumstances, whether an alien’s services are performed for an office or place of business in a State of the United States, or in a possession of the United States, might matter. See I.R.C. § 861(a)(3)(C)(ii). This is not advice to anyone.