Peter Gulia

Thank you, Brian Gilmore, for your great explanations. Current § 125 was added to the Internal Revenue Code by the Revenue Act of 1978. To interpret § 125, most of the agency law we look to is proposals, not rules. And much of that was proposed in the 1980s. Decades later, a lawyer properly cites proposed rules as the substantial authority. For that sad state of play, some might blame the Internal Revenue Service and the Treasury department. I don’t; those tax officials, executives, and lawyers do the best they can with the circumstances they’re given. 1981640914_1984-05-0719320-19329.pdf 1646025742_1989-03-079459-9504.pdf

Many people conflate the legal effects of not increasing the debt limit and of not providing appropriations. They are different things with different legal consequences. That’s why my originating post’s second and third paragraphs distinguish between them. Not increasing the debt limit does not require a government shutdown, but might lead some agency employees to reevaluate one’s career choices. And it might otherwise indirectly disrupt or delay the Labor and Treasury departments’ rulemaking and other guidance activities. One also might fear that the two events could both happen. Imagine that a delay from the US Treasury’s use of so-called “extraordinary measures” runs out in September. If the 118th Congress by September 30 remains at an impasse (not only about debt but also about spending), some political strategies could result also in not continuing appropriations after September 30.

Did this claimant have a physical or mental disability that interfered with meeting the claims-filing due date? Did this claimant misunderstand the due date by relying, reasonably, on misinformation provided by someone who had authority to speak on behalf of the plan’s administrator?

2023’s autumn might bring at least two possibilities for disruptions and delays in some activities of some Federal agencies, including the US Labor and Treasury departments. Not increasing the debt Congress authorizes the United States to incur might indirectly disrupt or delay the Labor and Treasury departments’ rulemaking and other guidance activities. Not continuing appropriations after September 30 and a resulting government shutdown would make it unlawful for the Labor and Treasury departments’ employees to work on rulemaking and other guidance activities. (If history is some guide about what could happen next: After November 1995, US government shutdowns have averaged about 19 days. The most recent was 35 days.) If 2023’s autumn brings a slowdown or shutdown, would a delay in rulemaking and other guidance activities matter for retirement plans and service providers?

Even to explain one plan, the Employee Retirement Income Security Act of 1974 permits a plan’s administrator to use more than one summary plan description, making them distinct by clearly identified classes. Each SPD may omit information that cannot apply to the class of participants or beneficiaries to which that SPD is addressed. 29 C.F.R. § 2520.102-4 https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-B/section-2520.102-4. But your focus on which benefit a participant enrolled in seems inapt. Rather, an SPD must describe each benefit its addressee could elect.

Paul I, thank you for your kind words and thoughtful observations. I asked a commenter to assume the work is Professional Services so the focus would be on my question about which person is a Member’s Principal. The Code’s definition for Professional Services also is awkward. Although the defined term “includ[es] the rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan”, that phrase, set off with a comma, might be illustrative but nonrestrictive. Arguably, Professional Services is any “services provided to a Principal by a Member[.]” (I recognize other possible interpretations, including some under text-interpretation presumptions that the expression of one thing sometimes suggests the exclusion of others, and that one interprets a text so every word or phrase has some effect.) If we exclude from Professional Services a recordkeeper’s employee’s nondiscretionary services, eight of the Code’s twelve rules might have no application. If a Member does not provide Professional Services, the Code’s rules 2 (advertising), 3 (communications), 5 (confidentiality), 6 (conflicts of interest), 7 (control of work product), 8 (courtesy and cooperation), 10 (professional integrity), and 11 (qualification standards) do not apply. What’s left? A Member must not use an ASPPA or other ARA Credential or Title untruthfully [rule 12]. A Member must disclose her and her “firm’s” compensation [rule 9]. A Member regulated by a profession (such as the “three As”—accountant, actuary, and attorney) must obey those conduct rules [rule 13]. (Rule 4 requires only that a Member “be knowledgeable about” and obey the Code.) Many interpreters, even many textualists, might reason that the American Retirement Association did not intend a Code that would have almost no application for many Members.

Thanks. I'm unaware of an ASPPA publication that describes an interpretation that says much beyond the Code of Conduct's one-sentence definition. That's why I seek the thinking of our BenefitsLink neighbors.

I’ll try my answer at my question. Let’s reject interpretation #3 because it would leave many ASPPA Members with no Principal, and so no particular person to which a professional-conduct duty is owed. While the Code of Conduct has a few rules (2, 12, 13) that do not depend on a relation to a particular person, applying only those would leave little of the confidence-building standards a professional code is meant to communicate. Let’s reject interpretation #2. About looking to the employee’s employer, the restrictive or defining clause “where the Member provides retirement plan services for their employer’s plan” isn’t met for a recordkeeper’s many employees who work only regarding external clients’ plans. And if one ignores the clause and looks to a Member’s employer as her Principal, the Code of Conduct wouldn’t do anything not already in the law governing the employee-employer relationship. I’m left with #1, using the idea that one favors a textually permissible interpretation that furthers, rather than obstructs, the text’s purpose. That would treat the recordkeeper’s clients (or some of them) as also the recordkeeper’s employee’s clients. If a third-party administrator provides its services for about two hundred plans and the TPA’s employee regularly works on about twenty of them, perhaps such an employee might know her Principals. But imagine a recordkeeper provides its services to 60,000 plan sponsors (with at least as many plans). Should an ASPPA Member treat as her Principal: all plan sponsors the recordkeeper serves? only those plan sponsors the employee knows the identity of? only those plan sponsors the recordkeeper has assigned the employee to work on? Or is there some other reason or context one uses to discern whether, or the circumstances in which, a plan’s sponsor or administrator is the Member’s Principal? BenefitsLink neighbors, what do you think?

To help me sort out how to interpret and apply ASPPA’s Code of Conduct, I ask for BenefitsLink neighbors’ thoughts about who is an ASPPA Member’s Principal when the Member is a nonowner employee of a service provider and does not control its relations with its customers. The Code’s definition for Principal is “any present or prospective client of a Member or the employer of a Member where the Member provides retirement plan services for their employer’s plan.” Imagine an ASPPA Member (under ASPPA’s Code, “[a]n individual”) who is an employee of a big recordkeeper. This employee never works on any employee-benefit plan the recordkeeper maintains for the recordkeeper’s employees. Rather, the recordkeeper uses the employee’s work to provide the recordkeeper’s services to the recordkeeper’s customers. Assume the work is, if provided to a Principal, “Professional Services” as ASPPA’s Code defines this. https://www.asppa.org/member/code-conduct 1. Is each of the recordkeeper’s customers the employee works on a Principal? Why or why not? Would whether the employee works on a dozen plans, a few hundred plans, or a few thousand plans affect your reasoning? Does it matter whether the employee knows some identity or information of a particular customer? What if the employee works on a process the recordkeeper uses in performing its services for many, most, or almost all its customers, but the employer seldom sees information on a particular customer? 2. Is the recordkeeper its employee’s only Principal? Why or why not? 3. Does this employee have no Principal, because she does no work on her employer’s plan and the recordkeeper’s customer is not the employee’s client? 4. Do you have some different way to interpret who is or isn’t the employee’s Principal? (As always, I own complete responsibility for whatever guidance or information I provide.) What are your thoughts?

If you continue with this client, make and keep records of the written advice you provide. Your descriptions of the client’s behavior suggest the client might assert it did not receive, or did not understand, your advice.

DMincevich, I imagine the hypothetical situation you describe has typical small-business facts under which the employer that sponsors a retirement plan also is the plan’s administrator. The employer might want its lawyers’ advice about the employer’s duties under the Immigration Control and Reform Act of 1986, other Federal laws regarding employment, States’ laws about employing workers and paying wages, and Federal, State, and municipal laws about reporting wages for tax and other purposes. In particular, the employer might want advice about whether it must or should file Form W-2c and W-3c corrected wage reports for wages paid in 2022 and earlier years, and Form 941-X returns for periods with incorrectly reported wages. The administrator might want its lawyers’ advice about the Employee Retirement Income Security Act of 1974, the Internal Revenue Code of 1986, and other Federal laws. That might include advice about how to correct carefully the plan’s records about a participant’s identity, and how to do it to not alter, discard, or conceal earlier records. That a worker was an alien an employer ought not to have employed does not defeat the worker’s rights as a participant under an ERISA-governed retirement plan.

The ten-year budget-reconciliation period for the Consolidated Appropriations Act, 2023, of which SECURE 2022 is a division, is fiscal years 2023-2032—that is, October 1, 2022 to September 30, 2032. The change to age 75 applies “[i]n the case of an individual who attains age 74 after December 31, 2032[.]” Internal Revenue Code § 401(a)(9)(C)(v)(II). Someone born in 1960 would reach age 74 in 2034, age 75 in 2035, and might have a required beginning date as soon as April 1, 2036. For someone born in 1960, an applicable age of 73 would result in a required beginning date no sooner than April 1, 2034 and a first distribution calendar year no sooner than the year ended December 31, 2033—1¼ years after the budget-reconciliation period ends. While I haven’t read the whole report, I imagine the revenue estimators could have assumed the change to an applicable age of 75 for those born in 1960 and later would bear no revenue loss in the budget-reconciliation period ending September 30, 2032. The Joint Committee on Taxation estimate scored the combination of both increases in applicable age for a required beginning date as a revenue loss of only about $7 billion for fiscal years 2023-2032. JCX-21-22 2022-12-22.pdf

Before turning to the questions you ask, an employer might want advice about how a more-generous election period relates to each insurance contract, whether health or stop-loss casualty, involved. For a stop-loss insurance contract regarding a group health plan that provides its benefit without health insurance (and instead by the employer’s self-funding), an election period more generous than public law requires might breach an obligation of the insured employer, breach a condition for the insurer’s obligation, or otherwise defeat what would be the insurer’s obligation regarding a continuee. Or for a group health insurance contract, an election period more generous than public law requires might breach an obligation of the employer as the group contract holder, breach a condition for the insurer’s obligation, or otherwise defeat what would be the insurer’s obligation regarding a continuee. With either of those contracts, an employer might want help from a reader who’s experienced or at least knowledgeable (and, preferably, with her own financial capacity to restore the employer's loss that results from its reliance on an adviser's incorrect or incomplete advice or information).

Thank you, Paul I. Your observations relate to why I ask my question. Because a cash-balance pension plan illustrates an accrual to look like an individual account, some participants—especially the many who never have been a participant under a defined-benefit plan that’s not a cash-balance plan—might imagine a plan must provide for some taker even if the participant has no surviving spouse. To them, a pension plan that provides nothing on an unmarried participant’s death before retirement could be a surprise. Except for a surviving spouse’s QPSA ERISA § 205 commands, does a cash-balance plan’s designer ever consider providing no death benefit in some circumstances? (If so, might that slightly lower the employer’s funding cost?) Or would not providing a death benefit be so contrary to the cash-balance idea that no one does it?

In a recent BenefitsLink discussion on how to handle a situation about an absence of a participant’s beneficiary designation, Calavera alluded to some possibility that a pension plan might, if there is no surviving spouse and no participant-designated beneficiary, provide no benefit distributable after the participant’s death. Even if it’s rare, has anyone seen a cash-balance pension plan with provisions like that?

And a plan’s administrator or claims administrator might evaluate whether someone should Read The Fabulous Document. Some documents impose a pension-like spouse’s-consent condition even when neither ERISA’s title I nor the Internal Revenue Code calls for it. While decades of improvements in service providers’ documents make such an unintended provision less likely than it once was, it is not yet so infrequent that it’s riskless for a plan’s administrator (or whoever really does the work) to omit reading the document. A risk evaluation might be affected by the size of a distribution, or of a set of distributions.

I have not read the subsection Internal Revenue Code § 414(v)(7)(A) refers to, and have not anything subsection 3121(a) refers to, directly or indirectly. Does “wages (as defined in section 3121(a))” include a person's self-employment income?

If the statute’s text were “wages” with no limiting or defining phrase, the Treasury department might interpret what the word “wages” means. But to interpret “wages (as defined in section 3121(a))” there ought to be somewhat less room for an intentionalist or purposivist interpretation.

Here’s another statute-reading exercise for BenefitsLink mavens. Internal Revenue Code § 414(v)(7)(A) restricts to Roth treatment a § 414(v)(1) catch-up deferral for “an eligible participant whose wages (as defined in section 3121(a)) for the preceding calendar year from the employer sponsoring the plan exceed $145,000[.]” If a retirement plan’s participant who otherwise would have had wages more than $145,000 had no wages (but as a partner had net earnings from self-employment more than $145,000), may she choose non-Roth catch-up deferrals?

EBECatty, thank you for your clear-minded reading. Yesterday, I was too dense to see it.

SECURE 2022 § 325 added only Internal Revenue Code § 402A(d)(5), quoted above. Here are links to Bloomberg’s edition of the Internal Revenue Code, with SECURE 2022 amendments: I.R.C. § 401 https://irc.bloombergtax.com/public/uscode/doc/irc/section_401; I.R.C. § 402A https://irc.bloombergtax.com/public/uscode/doc/irc/section_402a. I checked both these sections for references to “401(a)(9)(A)”, and founding nothing that undoes that minimum-distribution condition for Roth 401(k) participants. I checked both these sections for references to SECURE 2022’s § 325, and found nothing that undoes that minimum-distribution condition for Roth 401(k) participants. My searches in § 401 on “402A” and on “Roth” found nothing that undoes the § 401(a)(9)(A) minimum-distribution condition for Roth 401(k) participants. I want to be wrong, so I need not over the next ten years convert my Roth 401(k) amounts into Roth IRA amounts.

Like you, I believe someone intended the relief for all three kinds of employment-based eligible retirement plans. But I don't see any text in the statute that provides the nonapplication for a Roth 401(k) subaccount.

With a heading “Mandatory Distribution Rules Not to Apply Before Death”, Internal Revenue Code § 402A(d)(5), as SECURE 2022 adds it for tax years that begin on or after January 1, 2024 (with a transition for 2023 measures to be paid in 2024), provides: Notwithstanding sections 403(b)(10) and 457(d)(2), the following provisions shall not apply to any designated Roth account: (A) — Section 401(a)(9)(A). (B) — The incidental death benefit requirements of section 401(a). Am I reading correctly that only Roth 403(b) and Roth 457(b) participants are excused from minimum distribution before death? Or is there another provision I didn’t read thoroughly enough to find?

Below Ground, thank you for a most compelling reason to leave the plans distinct.

C.B. Zeller and Paul I, thank you for your thoughtful good help. Beyond simply crediting contributions when the recordkeeper receives them, is there another reason for the employer to worry that different payroll schedules confuses the recordkeeper?