Peter Gulia

The Joint Committee on Taxation’s narrative explanation of SECURE 2022 is a subpart in JCT’s General Explanation Of Tax Legislation Enacted In The 117th Congress, JCS-1-23 (Dec. 21, 2023). Although this is in JCT’s customary form for such a “blue book”, it is website-only. https://www.jct.gov/publications/2023/jcs-1-23/. If you want to extract the SECURE 2022 subpart, it is pages 295-530, which is pdf pages 307-542. In the subpart on SECURE 2022, the explanation notes at least 14 points for which the enacted statute might have an effect different than what the JCT staff assumes might have been Congress’s intent.

justanotheradmin, I suspect your way of letting the software provider find its error without embarrassment, and instead through internal processes, seems likelier to be effective.

For such a restatement that might be done in, for example, December 2028 or January 2029, how far retroactive in tax law changes does the remedial-amendment effect go?

Does the software provider’s license agreement include a warranty that using the software as specified results in legally correct reporting? And if so, does the provider have enough financial strength to pay on breaches of its warranty?

Although ERISA § 403(c)(1) commands that a plan’s assets must never inure to the benefit of any employer, § 403(c)(2)(A)(1) excepts a return, “within one year after the payment of the contribution”, of a contribution an employer made “by a mistake of fact[.]” ERISA § 403, unofficially compiled as 29 U.S.C. § 1103 http://uscode.house.gov/view.xhtml?req=(title:29%20section:1103%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1103)&f=treesort&edition=prelim&num=0&jumpTo=true. Interpretations about what is or isn’t a mistake of fact vary widely.

Unlike some employment-based retirement plans for which a § 401(a)(9) minimum-distribution provision might apply regarding the particular plan, for Individual Retirement Accounts tax law’s minimum-distribution condition applies to an individual, and applies regarding the aggregate of the IRAs an individual holds. A typical IRA custodial account agreement does not obligate (and might not permit) a custodian to pay a distribution the holder has not requested. And an IRA custodial account agreement might provide the custodian a right to delay payment if there are competing claims or other circumstances that raise a reasonable doubt about which person is the proper distributee. A custodian might have a right to wait until the custodian receives a court order or a settlement agreement that protects the custodian.

A person who seeks a New York State court’s order that the Teachers’ Retirement System of the City of New York (NYCTRS) would administer will want one’s lawyers’ advice about New York State law and the Retirement System’s law and procedures. NYCTRS publishes its TRS Guide to Domestic Relations Orders: https://www.trsnyc.org/memberportal/WebContent/publications/TRSGuidetoDRO.

And if you need full information, Ilene Ferenczy wrote the book on Employee Benefits in Mergers and Acquisitions, published by Wolters Kluwer.

Published in today’s Internal Revenue Bulletin, Notice 2024-2 addresses some aspects of remedial-amendment dates. Notice 2024-2, 2024-2 I.R.B. 316, 332-333 [including Q&A-J1] (Jan. 8, 2024), available at https://www.irs.gov/pub/irs-irbs/irb24-02.pdf. But the Notice does not further address the details for using IRS-preapproved documents.

If the first eligibility computation period for counting to 500 hours begins with the first day on which the employee is credited with an hour of service and the plan provides that the second period is the calendar plan year that begins within the first period, your first example might show a generosity in counting two 12-month periods in as little as a year and a day. The Treasury department’s explanation of its proposed rule speaks, indirectly, to your first example. See page 82802. https://www.govinfo.gov/content/pkg/FR-2023-11-27/pdf/2023-25987.pdf You are right that software designers and programmers ought to be accurate, complete, and careful about how one expresses tax law rules in software.

While § 3121(a)’s definition is much more detailed, your shorthand covers the essence for many employees of many smaller-business employers to which the tax credit might apply. Also, one might refer to Form W-2 box 3. I.R.C. (26 U.S.C.) § 3121 https://uscode.house.gov/view.xhtml?req=(title:26%20section:3121%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section3121)&f=treesort&edition=prelim&num=0&jumpTo=true

Have you done anything to check whether the letter is an authentic act of the Social Security Administration?

About Paul I’s last point: It’s EBSA internal policy to open an inquiry (not an investigation) if even one participant complains about an unresponsive employer/administrator. That often results in an explain-yourself letter addressed to the person EBSA sees, from Form 5500 reports and other records, as one who might act for the plan’s administrator or at least respond.

austin3515, you’re right that the proliferation of rules, variations, exceptions, and other complexity is confusing, overwhelming, and dispiriting. It increases disrespect for law. And yet you’re also right that we need more people who aren’t in the business of lobbying to speak up about how Congress legislates.

The rule’s Q&A T-13 says this: Q. For purposes of defining a key employee, who is an officer? A. Whether an individual is an officer shall be determined upon the basis of all the facts, including, for example, the source of his authority, the term for which elected or appointed, and the nature and extent of his duties. Generally, the term officer means an administrative executive who is in regular and continued service. The term officer implies continuity of service and excludes those employed for a special and single transaction. An employee who merely has the title of an officer but not the authority of an officer is not considered an officer for purposes of the key employee test. Similarly, an employee who does not have the title of an officer but has the authority of an officer is an officer for purposes of the key employee test. In the case of one or more employers treated as a single employer under sections 414(b), (c), or (m), whether or not an individual is an officer shall be determined based upon his responsibilities with respect to the employer or employers for which he is directly employed, and not with respect to the controlled group of corporations, employers under common control or affiliated service group. A partner of a partnership will not be treated as an officer for purposes of the key employee test merely because he owns a capital or profits interest in the partnership, exercises his voting rights as a partner, and may, for limited purposes, be authorized and does in fact act as an agent of the partnership. 26 C.F.R. § 1.416-1/Q&A T-13 https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.416-1. If the presence or absence of a job title that some might imagine suggests its wearer is an officer is not by itself dispositive: How does a TPA classify whether a nonowner is an officer? Do you: 1. Just let your client fill-in a census using its own sense about who is or isn’t an officer? 2. Write in your census request a plain-language explanation of the rule quoted above? 3. Look at not only the yes-or-no response to the officer query but also the rest of the census information to discern whether your client’s responses seem to make sense? 4. Do something else?

After reading the financial statements of Power Corporation of Canada [TSX:POW] and its indirect subsidiary Great-West Lifeco Inc. [TSX:GWO] (which indirectly holds Empower Holdings, Inc.), I don’t worry about the profitability of the Empower businesses.

Thank you, all, for helping me list provisions and other factors that point in the different directions. Mojo, my motivator for thinking about this is an employment-based plan that hates losing participants to IRAs when those resulting investments are much more expensive than, and the investment advice and other services inferior to, those available with the employment-based plan. (The plan, not yet a billion, has purchasing power and negotiation skills few individuals have or practically can use.)

And filing something gets a statute-of-limitations period running.

I’m curious, when a broker-dealer or investment-adviser rep presents an idea like Mega Roth, how many of them add to the description something like: “You should check it out with your retirement-plan guy.”? All? Many? Some? None?

Let’s leave to actuaries what mūtātīs mūtandīs might mean in mathematics. And let’s leave to teachers what mutatis mutandis might mean in logic. Black’s Law Dictionary (11th ed. 2019) describes the phrase’s meaning as “with the necessary changes[.]” Lawyers have used the phrase to avoid some duplicative renderings of terms, promises, conditions, representations, and warranties in some kinds of contracts, obligations, or undertakings. A leading treatise about how to write contracts gives this example: “Each Guarantor hereby makes to the Lender, as if they were in this agreement, mutatis mutandis, each of the statements of fact made by the Borrower in the Loan Agreement.” Kenneth A. Adams, A Manual of Style for Contract Drafting ¶ 13.576 [page 449] (5th ed. 2023). But whatever the old phrase might mean in other contexts, one should not presume that specifying a date that has some meaning regarding a plan’s discontinuance or termination by itself changes a day set for a retirement plan’s allocation condition. Bill Presson leads us to the solution: Read, thoroughly and carefully, what the documents governing the plan say. If what the documents provide is ambiguous, the plan’s administrator might use its discretion to interpret what the plan provides or omits. Often better, the administrator might suggest that the plan sponsor amend the documents. Or does The Shadow know?

I apologize for my ambiguity in my description of the facts. That the bank had notice of the payee’s death was not separately stated as a fact. Rather, I mentioned it only in my query about whether the payer should demand a return of the amounts the payee’s bank collected after that bank had notice of the payee’s death. In the real-life situation on which I wrote the description, the bank had actual written notice of the payee’s (the participant’s) death. Soon after the death, the decedent’s child presented to the bank the death certificate and the probate court’s appointment of the decedent’s child as the decedent’s estate’s executor and personal representative. Thank you for your observation that a bank might not know the duration for the recurring payments. But the payee was ‘Pamela Smith’, not ‘Pamela Smith or Samuel Smith’. Does a bank have a duty not to collect a payment made to a payee the bank knows is dead? When I was inside counsel to a recordkeeper and an affiliated trust company, they demanded returns of payments a bank collected after the payee’s death. In my experience, the banks paid on those demands. But it’s many years since I was in-house to retirement-services operations. When I posted, I had hoped someone with experience more recent, and more direct, than mine would describe what is done in current operations.

Thank you. In December 2022, I confirmed that Wolters Kluwer had made a business decision not to produce a book on SECURE 2022.

Thank you for noting ordering rules. If we assume the individual will take no payout until after five years’ Roth-ing and age 59½, does an ordering rule matter? Anything else?

Now that a plan with Roth 401(k) amounts can be amended so after 2023 no during-life minimum distribution is required from those amounts, is there a remaining reason an individual might prefer contributing to a Roth IRA rather than to a Roth 401(k)? Or is a choice between Roth 401(k) and Roth IRA in equipoise? Assume the amount the individual can afford to contribute is less than the IRA limit. Assume investment choices and access to investment advice do not favor an IRA.

Beyond using Appleby’s suggestions for fact-checking: The shareholder-employee might want his lawyers’ and accountants’ advice about whether the ostensible Form 5304 or other document was a false document and about whether the account someone imagined might be a SIMPLE IRA never was a SIMPLE IRA (and might never have been any kind of IRA). If the account never was an IRA, what tax consequences result from so amending the holder’s 2022 tax returns (removing mistaken exclusions and deductions, and recognizing whatever capital gains, dividends, and interest the taxable brokerage account paid or otherwise distributed)? Nothing here is tax or legal advice; it’s time for each person involved or affected to get his, her, or its professionals’ advice.