Peter Gulia

In 2006, the Treasury department, in a rulemaking that lets many things be done by electronic notices and electronic acts, considered but rejected remote witnessing for a spouse’s consent. The 2006 rule requires: “In the case of a participant election which is required to be witnessed by a plan representative or a notary public (such as a spousal consent under section 417), the signature of the individual making the participant election is witnessed in the physical presence of a plan representative or a notary public.” 26 C.F.R. § 1.401(a)-21(d)(6)(i) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)-21#p-1.401(a)-21(d)(6)(i). That rule remains in effect. Regarding the Coronavirus Disease 2019 emergency, IRS Notices provided some temporary relief for 2020, 2021, and 2022. Those Notices might have had some legal effect restraining the Treasury department and, arguably, the Labor department. The Notices had no effect on a spouse’s rights. On December 30, 2022, the notice of proposed rulemaking (cited above) was published. The IRS’s temporary relief ended with 2022. The proposed rulemaking’s explanation includes: “taxpayers may rely on the rules set forth in this notice of proposed rulemaking.” It is unclear what legal effect that statement has on the Labor department, or even the Treasury department. The Treasury’s explanation had and has no effect on a spouse’s rights. Although almost two years have passed since the close of the comment period on the 2022 notice, the Treasury department has not acted on the proposed rulemaking. It remains no more than a proposed interpretation. Further, even if the Treasury’s proposed interpretation were to be published as a final rule and to become effective and applicable, a Federal court deciding a dispute does not defer to an executive agency’s interpretation of a statute. Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. ---, 2024 BL 221307, 2024 LEXIS 2882, 2024 WL 3208360 (June 28, 2024). A Federal court may consider, but must not defer to, an executive agency’s interpretation of a statute. For a question of law not already answered by a judicial precedent, a court must decide a dispute with the court’s interpretation of the statute (ERISA § 205). I suspect (but don’t know) that some plan fiduciaries accepted some remote-witnessing consents in 2020, 2021, and 2022, especially when physical-presence notary service was hard to get. I’m much more interested in what plans are doing now. And I’m wondering whether plan fiduciaries evaluate the risks of remote-witnessing consents.

justanotheradmin, thank you for sharing your experience. For an ERISA-governed plan, whether a spouse’s consent is sufficiently witnessed to meet a plan’s provision designed to meet ERISA § 205 is governed by Federal law, not State law. But a State’s law governs whether a person is authorized to perform notarial acts, and the manner of how a notary performs a notarial act and makes a notarial certificate. Under the Treasury’s proposed interpretation, a plan could treat a witnessing as enough to meet ERISA § 205 if the witnessing follows both the State law that governs the officiating notary (which might be unrelated to any location of the participant, the consenting spouse, or the plan’s fiduciary) and the Treasury’s proposed rule. Whether a plan’s administrator should accept or refuse a remote witnessing is a serious question. To support my thinking about that question is why I’m seeking information about whether plans are using or ignoring the Treasury’s proposed interpretation. BenefitsLink neighbors, do you have other experiences or observations?

And much might be accomplished using no litigation but a plausible threat of litigation. A taxpayer in an IRS examination may request that the IRS’s Office of Chief Counsel advise the IRS about any question of law relevant to the examination. Considering that a taxpayer can challenge in Federal courts an IRS decision to tax-disqualify a plan, a Chief Counsel lawyer might, before responding in writing to a request, advise the IRS that the United States prefers not to litigate, apart from the pending Texas case, whether the Consolidated Appropriations Act, 2023 is law, and that the government’s interests could be served by negotiating a closing agreement, even if its terms are more favorable to the taxpayer than the IRS otherwise would offer.

When a participant seeks one’s spouse’s consent to name a primary beneficiary other than the spouse (or to elect against a survivor annuity), a consent has no effect unless “the spouse’s consent is witnessed by a plan representative or a notary public[.]” ERISA § 205(c)(2)(A)(iii). Although ERISA does not preclude a notary from using electronic means to furnish the notary’s certificate of a notarial act, a notary must witness the spouse signing the consent. 26 C.F.R. § 1.401(a)-21(d)(6). Until recently, most service providers advised plan administrators that this calls for a spouse to sign a consent in the notary’s physical presence. Under a proposed interpretation of the statute, a notary may witness the spouse’s signing with physical presence, or by using live audio-video technology and meeting all requirements and conditions under the proposed rule and the State law that applies to the notary. Use of an Electronic Medium to Make Participant Elections and Spousal Consents [notice of proposed rulemaking], 87 Federal Register 80501–80509 (Dec. 30, 2022). That notice states: “Prior to the applicability date of the final regulation, taxpayers may rely on the rules set forth in this notice of proposed rulemaking.” Id., at 80506. BenefitsLink neighbors, in your experience: Are plans’ fiduciaries accepting a notary’s certificate if the certificate shows the notary did the witnessing not by physical presence but rather by audio-video technology?

Thank you for your kind words. When I write or edit a plan’s governing documents, I write custom beneficiary provisions. That’s so even when I’m stuck with reacting to an IRS-preapproved document. Beyond allowing ways to help claimants and get efficient plan administration, one can write beneficiary provisions to narrow the plan administrator’s or claims administrator’s scope and so lessen its liability exposure. The beneficiary provisions are not one-size-fits-all because different plans face different challenges, and different administrator have different needs.

Even within one pension plan, a plan might provide different definitions of a spouse for different purposes. For example: A provision designed to meet Internal Revenue Code § 401(a)(9) might use Federal tax law’s definition of a spouse, and apply it to a relationship the church does not recognize as a marriage. A plan might impose a survivor annuity to protect a spouse of a marriage the church recognizes (and has not annulled), even if civil law ended the marriage. A plan might provide a special death benefit or a subsidized survivor annuity only to a surviving spouse of a marriage the church recognizes. A plan might, for some purposes not constrained by Federal tax law, recognize as a participant’s spouse a civil-union party or domestic partner, even if the U.S. Treasury department’s interpretation treats such a person as not a spouse.

Don’t assume a State’s law applies. If ERISA governs the employment-based retirement plan, ERISA supersedes and preempts States’ laws. If ERISA governs, a plan’s administrator administers the plan according to its governing documents. A typical plan document states provisions for recognizing a natural or appointed conservator, natural or appointed guardian, UTMA custodian, or other fiduciary to act for a minor. A plan’s administrator might, in some circumstances, consider a State’s law or States’ laws to form a finding about whether a person is empowered to act for the minor. When a death benefit is a small amount, a plan’s administrator might prudently form some risk-tolerant practical decisions. The administrator’s focus is on whether it is dealing with a satisfactory claimant and payee. That fiduciary of the minor sorts out what is or isn’t proper, and is or isn’t prudent, about a rollover to an IRA or a transfer into a trust or UTMA account. This is not advice to anyone.

Read carefully the investment’s application form and its instructions. An investment issuer might classify as an “ERISA” plan one to which Internal Revenue Code § 4975 applies, even if ERISA’s title I does not govern the plan.

An October 19, 2017 Internal Revenue Service memo (later put in the Internal Revenue Manual) directs an Employee Plans examiner not to challenge a plan’s tax-qualified treatment for failing to meet the plan’s minimum-distribution provisions if a plan’s administrator took the search steps the memo states. missing participant minimum distribution memo-for-employee-plans 2017-10-19.pdf

For a church plan that has not elected to be ERISA-governed: A church’s plan-design preferences about how to define a spouse might vary with each provision, following whether the provision: subsidizes an extra or incremental benefit for a spouse, otherwise specially benefits a spouse, benefits a participant, burdens a participant, is designed to follow applicable State law, is designed to follow relevant State law, is designed to meet a Federal or State tax-qualification condition, or is designed to gain a Federal or State tax advantage. For some provisions, a plan might follow an external civil-law definition of a spouse. For other provisions, a plan’s definition of a spouse might relate to the internal law of the church. Are you thinking about a health plan, a disability plan, a retirement plan, or something else? And which provision are you thinking about? For a provision that need not follow an external civil-law definition, a church might make different provisions about whom to treat as a spouse or not a spouse for different classes of workers, differentiating, for example, the church’s ministers, the church’s members, and employees who are neither. Consider also that opposite-sex or same-sex is only one of many possible grounds by which a church’s terms for what is a marriage or who is a spouse differ from a nation’s or State’s definition for a civil-law marriage. Further, a church might want its lawyer’s advice about governing-law provisions; exclusive-venue provisions; use of plan and church claims procedures, use of internal dispute-resolution procedures; and restrictions on which persons are authorized to accept service of process. This is not advice to anyone.

In the United States’ appeal, now captioned Texas v. Bondi, a panel of the Court of Appeals for the Fifth Circuit (Judges Graves, Higginson, and Wilson) heard oral argument on February 25, 2025. A recording of the oral argument is available at https://www.ca5.uscourts.gov/OralArgRecordings/24/24-10386_02-25-2025.mp3. I offer no prediction about what the panel, the whole Fifth Circuit, or the Supreme Court might decide. And I don’t offer my observations about the strengths and weaknesses of either litigant’s interpretation of applicable law, or about how law applies on the facts of Congress’s proceeding. A disposition likely would directly affect only whether the United States may or must not enforce the Pregnant Workers Fairness Act. Further, the appealed-from judgment provides relief only to the State of Texas. Yet, until there is a final decision of the Supreme Court of the United States, a plan’s sponsor or administrator might negotiate or defend something by asserting that SECURE 2022 is not law. This is not advice to anyone.

Beyond tax law: A deferred compensation plan is a contract between the employer or service recipient and the employee or nonemployee service provider. If that contract specifies when an amount is credited to an obligee’s account, the employer ought to follow the obligation the employer made. If the relevant document is not specific, the obligor ought to act in good faith, with fair dealing, and reasonably so as not to deprive the obligee of the benefit of the parties’ bargain. This is not advice to anyone.

Likewise, the JCT likely pretends the IRS will have capabilities to enforce tax law law as written.

The Treasury’s interpretation is that only an automatic-contribution arrangement designed to meet Internal Revenue Code § 414A (because the arrangement was not established before December 29, 2022 and fits no other exception) need apply to all eligible employees. An automatic-contribution arrangement that need not meet § 414A might not, in all circumstances, need to apply to every eligible employee. Isn’t it possible to have an eligible automatic-contribution arrangement to allow a permissible withdrawal for those (less than all) eligible employees who enjoy or suffer the implied-assent election (while not using that EACA to get a later time to distribute or forfeit excess aggregate contributions, if any)? Further, an automatic-contribution arrangement designed as neither a qualified arrangement nor an eligible arrangement might get no less room to apply to less than all eligible employees. I have not considered what provisions are within or beyond reliance on an IRS-preapproved document.

From the Treasury department’s explanation of the proposed rulemaking to interpret Internal Revenue Code § 414A: II. Section 1.414(w)–1 A. Employees Covered by the EACA As explained in section I.B.1 of this Explanation of Provisions, proposed § 1.414A–1 would clarify that, in order for a CODA or salary reduction agreement under section 403(b) to satisfy the automatic enrollment requirements of section 414A, all employees in the plan who are eligible to elect to have contributions made on their behalf under the CODA or pursuant to a salary reduction agreement must be covered by the EACA. Section 1.414(w)–1(b)(1) currently provides that an EACA need not cover all employees who are eligible to elect to have contributions made on their behalf under the applicable employer plan. For consistency with proposed § 1.414A–1, this notice of proposed rulemaking would amend § 1.414(w)–1(b)(1) to clarify that the section 414A requirement to be covered by an EACA overrides the existing rule in the EACA regulations. https://www.govinfo.gov/content/pkg/FR-2025-01-14/pdf/2025-00501.pdf, at page 3101 [left column]. The proposed rule’s text about that distinction is: Except to the extent required under section 414A (which applies to plan years beginning after December 31, 2024), an eligible automatic contribution arrangement need not cover all employees who are eligible to elect to have contributions made on their behalf under the applicable employer plan. https://www.govinfo.gov/content/pkg/FR-2025-01-14/pdf/2025-00501.pdf, at page 3103 [right column]. If a plan’s automatic-contribution arrangement need not meet I.R.C. § 414A, a plan sponsor might consider which employees enjoy or suffer a default, and which employees elect deferrals only by an affirmative election. This is not advice to anyone.

One wonders whether the Joint Committee on Taxation and the Congressional Budget Office, when they form the revenue-effects estimates, consider executive agencies’ nonenforcement. And if they consider that, how they estimate the nonenforcement. For example: By announcing two years’ nonenforcement of tax law that requires some participants’ age-based catch-up deferrals be made as Roth contributions, the IRS gave away more than $4 billion [$4,042 million] in budgeted revenue.

I confess I assumed the query’s premise without considering which kinds of plans get or lack SECURE 2022 § 501’s relief, or other tax law or IRS relief. When my scope includes responsibility for a written plan, I don’t wait for remedial-amendment periods; I revise my client’s plan document in real time. For example, I delivered SECURE 2019 restatements in January 2020, and SECURE 2022 restatements in January 2023. Also, an adviser might consider that a remedial-amendment period is a legal fiction for tax law, but does not impair a participant’s or beneficiary’s ERISA title I rights or rights the written plan provides. A nongovernmental § 457(b) plan might not have needed much amendment.

If the plan sponsor’s goal is increasing nonhighly-compensated employees’ elective deferrals: Beyond increasing an arrangement’s initial default percentage for newly eligible employees, consider also: a “reenrollment” so a participant with a deferral percentage (whether affirmative or impliedly elected) less than the new initial default percentage is defaulted to that percentage, unless the participant opts out; an “auto-escalation” provision to increase a participant’s deferral percentage each successive year. (Everything depends on an appropriate notice and a participant’s opportunity to opt out from whatever default is presented.) I don’t advocate these plan designs, but merely mention them as provisions some plan sponsors adopt. Among many factors to consider for these and other plan-design questions, a plan sponsor might consider its guesses and perceptions about how employees might react to a presented default or escalation. Some employers worry that too much attention to an elective-deferral arrangement might awaken some employees, and might lead some to decrease or end one’s deferral election. A plan sponsor might consider doing only what’s feasible within the employer’s capabilities and the recordkeeper’s and third-party administrator’s services.

The relief the IRS describes seems available if, with other conditions, “the amendment is adopted no later than the last day of the first plan year [sic] beginning on or after January 1, 2025[.]” IRS, Miscellaneous Changes Under the SECURE 2.0 Act of 2022, Notice 2024-2, 2024–2 I.R.B. 316, 331 [middle column] (Jan. 8, 2024), https://www.irs.gov/pub/irs-irbs/irb24-02.pdf. (I’m not aware that the IRS published further relief.) Before considering a due date for a plan amendment, consider whether the employer needs or wants an amendment. Many plan-design features from SECURE 2019 and SECURE 2022 are not available for nongovernmental § 457(b) plans. A plan’s document before December 2019 might state distribution provisions that meet all § 401(a)(9) conditions, even after considering all SECURE 2019 and SECURE 2022 changes. An ERISA-governed select-group plan not governed by ERISA § 206 need not recognize domestic-relations orders, and so need not recognize a Native American Indian tribe’s order. If the plan allows an employee to elect a deferral and allows such an election more often than yearly, an employer might amend its plan to undo a provision that “compensation will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month[.]”

Unless the circumstances fit one of the rule’s specified exclusions, the rule’s definition of a blackout period does not turn on why there is a temporary restriction. 29 C.F.R. § 2520.101-3(d)(1)(i) https://www.ecfr.gov/current/title-29/part-2520/section-2520.101-3#p-2520.101-3(d)(1)(i).

But consider reminding your client that there might be internal records of the company’s resolutions, consents, and other acts. Those records might document which humans have which responsibilities in acting for the company. The company, or an individual, might prefer that those records state accurately who’s responsible for what. And if someone thinks it’s merely a tedious housekeeping chore, consider that these company records might affect the company’s indemnity obligations and an individual’s indemnity rights.

Here’s the rule Bruce1 alludes to: 26 C.F.R. § 1.401(a)(9)-5(d)(1)(i) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-5#p-1.401(a)(9)-5(d)(1)(i). That rule applies “for purposes of determining required minimum distributions for calendar years beginning on or after January 1, 2025.” How to interpret the rule that applied for years before 2025 is unclear. This is not advice to anyone.

I admire your creative thinking. Not knowing which (if any) of the children is your advisee, or whether the IRA custodian is your advisee: Consider whether trying to do what you suggest might delay the settlement. Consider whether trying to do what you suggest might incur expenses—including for one or more professionals’ time—disproportionate to the stakes for the settlement. If a settlement agreement is only among the children, would it bind the United States? Although you suppose an excise tax on not having received a 2023 minimum distribution, consider that some (or all) of the settlement’s takers might assume, each for oneself, that the individual was not a beneficiary at a relevant time or otherwise is not responsible for an excise tax. Whether for that or another reason, an individual might file her tax returns without Form 5329. The IRS might not detect that some (or all) of the excise tax on a missed minimum distribution is not stated on Form 5329 returns. Consider differences between 26 C.F.R. § 54.4974-1 as it applies to an individual’s tax year that began or begins on or after January 1, 2025 and, for earlier tax years, 26 C.F.R. § 54.4974-2 as published before a July 19, 2024 amendment. See https://www.ecfr.gov/current/title-26/part-54/section-54.4974-1#p-54.4974-1(h). This is not advice to anyone.

And when you turn to reporting one or both changes, Form 5500 part II line 4 and the Instructions for it (page 18) state details about how to report a change in the plan’s name or a change in the sponsor’s name. The format recognizes that either of these names might have changed when the other has not. https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2024-form-5500.pdf https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2024-instructions.pdf

About my query (above): Some lawyers sometimes advise that it might be unwise to state an offer of language assistance (if applicable law does not require it) if the employer/administrator is not certain it will be ready to fulfill the offered assistance. In typical plan document/SPD assembly, does a user get a choice about whether to include an offer of language assistance?