Peter Gulia

Paul I, thank you. BenefitsLink neighbors, further thoughts on how to help an actuary?

Actuaries, for situations in which you must integrate or at least align your work with others’ work—or doing your work depends on information from another professional’s work—what can other professionals do to help, or at least not interfere with, your work? My law school courses for LLM and MST students include lessons on how professionals of all stripes should be respectful of another’s profession, and should do one’s own work in ways that support another professional’s work. I hope to fill out an explanation of how lawyers, accountants, and other professionals can work in ways that help an actuary do her work. This can be about an actuary’s work for health, disability, and other welfare benefit plans; pension and other retirement plans; or pricing any kind of insurance. What could someone else do to make your work as an actuary a little easier? And for a BenefitsLink neighbor who is not an actuary, what work steps improve your working relationship with an actuary?

Many charities and other tax-exempt organizations have an accounting year meant to measure a program year, and a year ended June 30 is a common choice. Some profit-seeking businesses have seasonal or business-cycle reasons to use an accounting year with an end other than December. In my experience, it’s often simpler to administer an individual-account (defined-contribution) retirement plan with a calendar plan year, rather than a plan sponsor’s or participating employer’s accounting year. But much depends on the plan’s provisions. And on how strong or weak is the employer’s need or interest in measuring an accrual for a nonelective or matching contribution on the employer’s accounting year. If there’s a reason to revisit a selection of either the employer’s accounting year or the plan’s accounting year or other plan year, consider involving both sets of decision-makers, including each’s lawyers and accountants.

The House bill you point to was introduced in the 118th (2023-2024) Congress, saw no action beyond the introduction, and died with the end of the 118th Congress. Even if similar legislation is introduced in the 119th Congress, enactment in 2025 or 2026 seems unlikely. Among other reasons, I doubt 50 Senators would vote to abolish or change the Senate’s unlimited-debate rule. Thus, unless support for the legislation is unanimous, proceeding to a Senate vote on a bill would require 60 Senators to vote for cloture. And because a bill might suffer multiple filibusters, even a bill supported by 60 or more Senators might be delayed. The States’ attorneys general February 6, 2025 letter: mentions that some officials of some States have suggested that a governmental plan divest from China; asserts that BlackRock and some other investment managers had not sufficiently disclosed information about some funds’ investments in China; asserts that some descriptions about a fund’s ESG, especially environmental, qualities are misleading; describes an ERISA-governed plan’s fiduciary’s responsibility to meet ERISA § 404(a)(1)(B)’s prudence in evaluating the fiduciary’s investment decision. Following this, the letter suggests that a fiduciary who too easily relies on a prospectus, offering statement, or other description with omitted or misleading information might not meet § 404(a)(1)(B)’s prudence. The letter does not state that any State’s constitution, statute, or other act that has the force of law precludes an investment in China or a foreign adversary. If there is such a State law, ERISA supersedes a State law that relates to an ERISA fiduciary’s responsibility. For a background on how courts have interpreted ERISA § 514, see “The Complex World of ERISA Preemption” [chapter 9] in ERISA: A Comprehensive Guide (Wolters Kluwer 10th ed. updated Dec. 18, 2024). If your firm isn’t a subscriber, see https://law-store.wolterskluwer.com/s/product/erisa-a-comprehensive-guide-10e-misb/01t4R00000PHIACQA5. (Although I’m a contributing author in that treatise, I get no $ for suggesting it and no royalty on sales.) ERISA might not preempt a State law that regulates banking, insurance, or securities. Yet, other Federal law often preempts a State law that would regulate banking or securities.

While Gadgetfreak is right to mention the 5%-owner variation, consider further that whether a participant is or was “a 5-percent owner (as defined in section 416)” for § 401(a)(9) is determined “with respect to the plan year ending in the calendar year in which the employee attains the applicable age[.]” Internal Revenue Code of 1986 (26 U.S.C.) § 401(a)(9)(C)(ii)(I). “For purposes of section 401(a)(9), a 5-percent owner is [a participant] who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the [participant] attains the applicable age.” 26 C.F.R. § 1.401(a)(9)-2(b)(3)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-2#p-1.401(a)(9)-2(b)(3)(ii). Nancy’s query supposes that the lawyer “changed status . . . in 2021 when he attained age 70.” Many law firms’ partnership agreements provide age 70 as a mandatory or presumptive retirement age. Often, a retired partner continues working, but on a less active schedule. A change in classification from an active partner to an inactive or retired partner often involves adjusting or redeeming a partner’s capital interests, profits interests, or both. By 2024 or the other relevant year in which the participant reached age 73, he might no longer have been a 5% owner. For a participant not constrained by the 5%-owner variation, one’s required beginning date might follow from the later of one’s applicable age and “[t]he calendar year in which the [participant] retires from employment with the employer maintaining the plan.” 26 C.F.R. § 1.401(a)(9)-2(b)(1)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-2#p-1.401(a)(9)-2(b)(1)(ii). Again, a service provider might suggest that the plan’s administrator check carefully the facts and consider prudently how relevant law applies regarding the facts found.

In lawyers’ and law firms’ lingo, the label “of counsel” has no one settled meaning. It can relate to any of many kinds of relationships. It can, in context, refer to a current partner, a retired partner, an employee, or a nonemployee contractor. Does the of-counsel lawyer provide any service? Even having a lunch conversation with a client’s inside counsel or executive to help keep the client content with the relationship might be a valuable service. Don’t reflexively assume this person is retired. Suggest the plan’s administrator decide whether the participant is or isn’t retired (in the sense Internal Revenue Code § 401(a)(9) uses that word). If the law firm feels unready to interpret § 401(a)(9) and how it applies regarding the facts, you can suggest that the firm might get another lawyer’s advice.

That someone said “[I’m] about to get married” does not necessarily mean he did not already have a spouse. He might have colloquially said “get married” to refer to a ceremony, rather than making the legal status of spouses. An employee-benefit plan’s administrator might want its lawyers’ advice about whether it might be unwise to ask this individual for proof not asked of others. Consider that even a fleeting presence in a nation, state, or other jurisdiction that at the time recognized common-law marriage could have resulted in a couple’s marriage. What makes a common-law marriage is that each party must be legally capable of making a marriage contract and each must state one’s present agreement to assume the relationship of spouses. That statement need not be in writing, it can be oral. Every US State recognizes as a marriage a common-law marriage made in a jurisdiction where such a marriage is legally recognized. For example, California Family Code § 308 states: “A marriage contracted outside this state that would be valid by laws of the jurisdiction in which the marriage was contracted is valid in California.” Even a weekend or one-day trip can result in a marriage. For example, Tornese v. Tornese, 233 App. Div. 2d 316, 649 N.Y.S.2d 177, 1996 N.Y. App. Div. LEXIS 11623 (N.Y. App. Div. 1996) (“[O]n a weekend trip to Pennsylvania in 1976, [John] told [Helen], . . . , that their divorce about two months earlier had been a mistake, [Helen] agreed, and the parties decided that they were married.”). WalkingAssets, I don’t suggest that the couple you describe are spouses; rather, I suggest you might not know that they’re not. This is not advice to anyone.

I’m very glad you responded, and with the useful information you added. It’s information I otherwise would lack because the last time I had responsibility to get an IRS opinion or determination letter on the form of a plan’s documents was in the 1990s. And your story reinforces the point that there can be, and sometimes need to be, different defined terms for different provisions.

Before too hastily assuming that the plan was administered other than according to the written plan’s provisions, consider looking carefully to find all possibly relevant writings and evaluating whether some writings amended what otherwise would be “the” plan documents. Although ERISA calls for a plan to be written, it need not be one fully integrated exclusive writing. And nothing in ERISA commands that an amendment be made with the same formality as the writing the amendment would change. Several courts’ decisions observe that a written plan might comprise several formal and informal writings. Many plans do not restrict what kind of writing amends a plan. (One would read, carefully, the documents governing the plan to confirm the absence of a restriction that would make a less-formal writing insufficient to amend the plan.) For example, a written agreement with a default IRA provider might state that the plan provides an involuntary distribution of a balance that’s no more than $5,000 (or the applicable limit on an involuntary distribution before the participant’s normal retirement age). Such an agreement might have been signed, ratified, or otherwise adopted by a person who or that had authority to amend the plan. Likewise, communications to participants might have stated the cash-out provision, and might have been signed, ratified, or otherwise adopted by a person who or that had authority to amend the plan. A signature can be using on or in a writing a person’s name, including a corporation’s or other organization’s name, with an intent to adopt the writing. Under Federal law, an electronic signature can be as simple as sending an email with the sender’s intent to adopt the text the email delivers. A plan sponsor might want its lawyers’ reading and advice about whether the sponsor amended the plan to change the involuntary-distribution threshold, and (if the sponsor did) when the amendment took effect. This is not advice to anyone.

What CuseFan describes seems logically consistent with some possibilities and assumptions my posts in this thread mention.

The second page of a Form 5500 report shows the plan’s administrator’s name, address, and telephone number. The reports are readily available at https://www.efast.dol.gov/5500Search/. To avoid a list of 593 reports for which the “Plan Name” begins with FedEx, use the webpage’s search filters. Further, you might ask whether FedEx or Vanguard outsources reviews of domestic-relations orders.

R Griffith, thank you for the point about managed accounts.

If the plan sponsor is not in a chapter 7 liquidation bankruptcy, a termination administrator is a qualified termination administrator “only if: (1) It is eligible to serve as a trustee or issuer of an [IRA], and (2) It holds assets of the plan that is found abandoned [under the QTA rule].” 29 C.F.R. § 2578.1(g) https://www.ecfr.gov/current/title-29/part-2578#p-2578.1(g). Otherwise, a Federal court appoints an EBSA-selected cleanup fiduciary when no one applies to serve as a QTA (or none is eligible), no bankruptcy trustee or insolvency receiver serves, and the Secretary of Labor, acting by the Solicitor of Labor, brings a civil action. (The Labor department makes policy and strategic decisions about which situations to pursue, and which to ignore.) A District Judge typically follows Labor’s suggestion on who should serve as a cleanup fiduciary. Some trust or insurance companies volunteer to serve as a qualified termination administrator; some don’t. You might be in luck; Voya serves. https://www.askebsa.dol.gov/AbandonedPlanSearch/UI/QTASearchResults.aspx If you know the plan’s administrator’s contact at Voya, consider starting there.

Even if an adjunct teaches in every semester, an adjunct who teaches one course each semester, has no student-counseling obligation beyond her one course, has no administrative obligation beyond grading her course’s students, has no faculty-committees obligation, and has no scholarly-publishing obligation seems unlikely to be credited with 1,000 hours of service in a year. Universities have a range of conventions for estimating an adjunct’s hours of service. Just to show one: To discern for the excise tax on not providing health coverage whether an employee has 30 hours a week or 130 hours a month, some employers use this: “[O]ne (but not the only) method that is reasonable for this purpose would credit an adjunct faculty member of an institution of higher education with (a) 2¼ hours of service (representing a combination of teaching or classroom time and time performing related tasks such as class preparation and grading of examinations or papers) per week for each hour of teaching or classroom time (in other words, in addition to crediting an hour of service for each hour teaching in the classroom, this method would credit an additional 1¼ hours for activities such as class preparation and grading) and, separately, (b) an hour of service per week for each additional hour outside of the classroom the faculty member spends performing duties he or she is required to perform (such as required office hours or required attendance at faculty meetings).” Page 8552, left column https://www.govinfo.gov/content/pkg/FR-2014-02-12/pdf/2014-03082.pdf Assume a 15-week semester and that an adjunct teaches in both semesters of a two-semester academic year. Assume an adjunct is expected during a semester to be “reasonably available” to counsel her students. That’s 30 hours under the (b) element of the paragraph quoted above. To meet 970 hours for the (a) element, a teacher would need 431 hours of classroom time. Even an adjunct who has taught regularly for many years might never have had a 12-month period with 1,000 hours of service.

The employer might fear enforcement from workers and organized labor even more than enforcement by the US Labor department’s Employee Benefits Security Administration. The employer might want its bankruptcy lawyer’s advice about which debts are nondischargeable. Each of the employer’s owners and executives might want one’s lawyer’s advice about the extent to which the individual might be personally liable regarding the employer’s debts. This is not advice to anyone.

And when one reads all plan and trust documents, be on the lookout for provisions that might be invalid, or that might not have the effect a reader might discern from an isolated reading. “[A] provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this part [ERISA §§ 401-414] shall be void as against public policy.” ERISA § 410(a), 29 U.S.C. § 1110(a). An ERISA-governed plan’s trustee cannot escape an ERISA-provided responsibility, including a § 405(a) responsibility regarding a cotrustee’s, administrator’s, or other fiduciary’s breach.

Depending on the facts, consider some opportunities a plan’s sponsor or administrator might evaluate (with its lawyer’s advice): Are regular faculty represented in collective bargaining? Are some nonfaculty employees represented? Are adjunct faculty represented or unrepresented (or some of each)? Is distinct testing regarding an unrepresented group available? If so, would it help? Does the plan uniformly exclude from matching contributions an instructor who is also a student? Does the plan uniformly provide that the matching contribution is not allocated for a year (however defined or measured) in which the employee lacks a specified number of hours of service? What approximation method does the university use to count an adjunct’s hours of service? Example: At Baker University, a full-time assistant professor must teach courses totaling seven credits in each of an academic year’s two semesters. Alan Adjunct teaches one three-credit course in each of an academic year’s two semesters. Does the 6/14 ratio suggest that Alan works less than half-time? See 26 C.F.R. § 1.403(b)-4(e)(6) (“For example, a plan may provide for a university professor’s work to be measured by the number of courses taught during an annual work period in any case in which that individual’s work assignment is generally based on a specified number of courses to be taught.”). Do many adjuncts “normally work less than 20 hours per week”? I.R.C. (26 U.S.C.) § 403(b)(12)(A). Is an adjunct who has no current appointment severed from employment? (A university’s appointment of an adjunct professor, lecturer, or instructor as adjunct faculty typically is for only one specified semester, with the university having no further obligation. Even for a well-liked teacher, there are lots of ways one might not get a next appointment.) Consider 26 C.F.R. § 1.403(b)-2(b)(19) (defining severance from employment by reference to § 401(k)’s rule); § 1.401(k)-1(d)(2) (“An employee has a severance from employment when the employee ceases to be an employee of the employer maintaining the plan.”). If for a whole year to be tested an adjunct had zero wages, is it reasonable to treat such an adjunct as having been severed from employment before the year began? For a § 403(b) plan, recognize that § 401(a)(4), § 401(a)(5), § 401(a)(17), § 401(a)(26), § 401(m), and § 410(b) apply only regarding “contributions NOT made pursuant to a salary reduction agreement[.]” Internal Revenue Code of 1986 (26 U.S.C.) § 403(b)(12)(A)(i). This is not advice to anyone.

The § 72(t)(2)(A)(v) exception from a too-early tax applies to a distribution “made to [the participant] after separation from service after attainment of age 55[.]” http://uscode.house.gov/view.xhtml?req=(title:26 section:72 edition:prelim) OR (granuleid:USC-prelim-title26-section72)&f=treesort&edition=prelim&num=0&jumpTo=true The IRS recognizes a practical tolerance about the age-55 condition: “A distribution to [a participant] from a qualified plan will be treated as within section 72(t)(2)(A)(v) if (i) it is made after the [participant] has separated from service for the employer maintaining the plan and (ii) such separation from service occurred during or after the calendar year in which the employee attained age 55.” IRS, Employee Plans-Miscellaneous Tax Reform Changes, Notice 1987-13, 1987-1 C.B. 432, at § D, Q&A-20. But the tolerance about the age-55 condition does not change the separation-from-service condition. This is not advice to anyone.

Many individual-account retirement plans don’t allow an annuity as a form of distribution. Of employment-based individual-account retirement plans that allow an annuity, the rates are not sex-distinct. Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (July 6, 1983). Likewise, factors to determine other-than-an-annuity Internal Revenue Code § 401(a)(9) minimum-distribution amounts are not sex-distinct. See 26 C.F.R. § 1.401(a)(9)-9 (GPO eCFR as of Mar. 31, 2025), https://www.ecfr.gov/current/title-26/section-1.401(a)(9)-9.

Even if the trust agreement allows each trustee to act distinctly: If the plan is ERISA-governed, consider: ERISA § 405(b) about cotrustess; ERISA § 405(c) about allocations of responsibilities between and among fiduciaries; ERISA § 405(d) about investment managers; ERISA § 405(a) about a fiduciary’s responsibility regarding another fiduciary’s breach. ERISA § 405, 29 U.S.C. § 1105 http://uscode.house.gov/view.xhtml?req=(title:29 section:1105 edition:prelim) OR (granuleid:USC-prelim-title29-section1105)&f=treesort&edition=prelim&num=0&jumpTo=true If the plan is not ERISA-governed, consider responsibilities of cotrustees and other fiduciary relations under each State’s law that governs the trust or an agreement. This is not advice to anyone.

The order’s § 4(a)(1)(i) directs the “Secretary of the Treasury [to] review and, as appropriate, revise procedures for granting limited exceptions where electronic payment and collection methods are not feasible, including exceptions for: (i) individuals who do not have access to banking services or electronic payment systems[.]” For an employer organization’s payment to the US Treasury, would a new electronic-only requirement make work difficult for a retirement-plans practitioner?

BG5150, seeing you then had no volunteers on your query, I invited you to consider one of many opportunities an employer or plan fiduciary might consider. In my experience, retirement plans’ fiduciaries and practitioners who advise them have wide ranges of interpretations about how an ERISA § 403(c)(2)(A)(i) or Internal Revenue Code § 401(a)(2) mistake-of-fact concept applies regarding a particular set of facts. If a plan’s fiduciary approves a return grounded on a mistake of fact, “[e]arnings attributable to the [mistaken amount] may not be returned to the employer” and “losses attributable [to the mistaken amount] must reduce the amount to be so returned.” And: “Furthermore, if the withdrawal of the amount attributable to the mistaken . . . contribution would cause the balance of the individual account of any participant to be reduced to less than the balance which would have been in the account had the mistaken . . . amount not been contributed, then the amount to be returned to the employer must be limited so as to avoid such reduction.” Revenue Ruling 91-4, 1991-1 C. B. 57, superseding Revenue Ruling 77-200, 1977-1 C.B. 98. Consider also that if, following a mistake-of-fact decision, an amount taken from a participant’s pay is treated as not the participant’s elective deferral, the employer owes its employee the yet-unpaid wages, with interest provided under a State’s wage-payment law or otherwise to compensate the employee for the time value of money. You know your client, the situation’s facts, and other surrounding facts. And you know about your client’s capabilities and weaknesses in implementing a correction. Further, consider Paul I’s thoughtful suggestions.

I don’t imagine collecting information about sex or gender is unnecessary or superficial. Rather, I sense service providers have practical uses for the information, and I seek to learn more about those uses. david rigby, thank you for the inertia explanation. Also, I know information about sex or gender can matter for a defined-benefit pension plan; that’s why my query assumed an employment-based individual-account (defined-contribution) retirement plan. And I know an employer might have many purposes for recording and using information about an employee’s sex or gender. But my query is about what an individual-account retirement plan’s service provider does with gender information. Especially if the service provider never provides services regarding a defined-benefit pension plan. It’s been almost 20 years since I worked inside a recordkeeper. Every day, I learn about recordkeepers’ offers of services and ways of working that didn’t exist 20 years ago. Sometimes, I learn directly from a recordkeeper. But sometimes I seek information that doesn’t depend on my work directly for a particular client.

Is there an opportunity for the plan’s administrator to direct the plan’s trustee to return mistake-of-fact contribution amounts to the employer, and for the employer to pay each affected employee the employee’s unpaid wages? And correct all records of elective deferrals?

President Trump’s Executive Order Modernizing Payments To and From America’s Bank Account calls for payments to the US government to be made only by electronic-funds-transfer. https://www.govinfo.gov/content/pkg/FR-2025-03-28/pdf/2025-05522.pdf Is there a situation in which lacking an opportunity to pay—one’s own payment, or a client’s payment—by a paper check would be a hardship for a retirement, health, or other employee-benefits practitioner?