Post-Severance Compensation

The law says that post-severance compensation can be included if paid within 2 1/2 months of severance.  Our TPA wants to put it in their system that post-severance compensation is included if paid within 75 days of severance.  They says 2 1/2 months is vague and potentially variable (given leap years), so their system would work better if they use a set number of days.

Is this allowed?  Is "75 days" a good faith interpretation of the meaning of 2 1/2 months?  Or should we insist on "2 1/2 months" as the appropriate time period?

As long as that is applied consistently without discrimination I don't see a problem and agree that 2 1/2 months can be vague and open to interpretation (which then should also be applied consistently without discrimination). It appears then this is what the TPA is essentially suggesting, that the Plan Administrator adopt an interpretation that 2 1/2 months for this purpose is 75 days. I think most view as half month as 15 days, one could argue 14 if February is involved or 16 days for 31 day month, not to mention the number of days in respective full months, so formalizing a plan policy at 75 days and coding the administrative system makes sense.

The 75 days might be a reasonable expression that some might defend as slightly narrower than 2½ months.

365 / 12 = 30.4167 (average number of days in a month)

30.4167 x 2.5 = 76.0418 days

The tax-law rule seems to allow a plan to count some recognized kinds of post-severance compensation, even if paid later than 2½ months after the severance, if it “is paid by . . . the end of the limitation year that includes the date of severance from employment with the employer maintaining the plan.”

26 C.F.R. § 1.415(c)-2(e)(3)(i) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.415(c)-2#p-1.415(c)-2(e)(3)(i)

(If the plan’s limitation year is the calendar year and the plan provides as much time as the tax-law rule allows, a severance before October 17 might get a tolerance more than 75 days. A severance in the first few days of January might get around 360 days.)

Is the TPA’s software coder writing her code to allow also the limitation-year alternative?