Would a government shutdown delay implementing SECURE 2022?

For those planning software changes and service changes following law changes from the SECURE 2.0 Act of 2022:

“The federal government could shut down in October. Here’s how and why.” https://www.washingtonpost.com/business/2023/government-shutdown/?utm_campaign=wp_the_5_minute_fix&utm_medium=email&utm_source=newsletter&wpisrc=nl_fix

An Anti-Deficiency Act government shutdown does not stop every function. But if Labor or Treasury has an appropriations lapse, its work on rulemakings and interpretive guidance would pause until the shutdown ends.

The most recent shutdown lasted 34 days.

Even if we set aside optional changes, what happens if an absence of guidance results in no software for provisions required as a condition of continued tax qualification?

The answer likely will be to make a good-faith effort to comply.  This is not very helpful and everyone whose good-faith effort doesn't mesh with future final guidance will have to change what they implemented.

We do have a precedent with our experience with the pandemic.  The world shut down in March 2020 and Congress went on a to pass a lot of legislation permitting bending the rules to make money available from retirement plans.  There was very little guidance, and the shutdown lasted longer than anticipated.  The significant cuts in funding to the agencies that preceded the pandemic had already hampered their ability to recover once we learned how to cope with pandemic.

Dare we imagine a scenario where industry associations, major recordkeeping firms, benefits consulting firms and ERISA law firm come together collectively to provide guidance?

The software developers and recordkeepers could, if they choose, decide interpretations for SECURE 2022’s unanswered questions. And if a critical mass did so with common answers, they could, practically, force the IRS to fall in with those interpretations. So far, the businesses seem to prefer a go-slow.

Peter, I generally agree with what Paul I suggested. I do see your point about a shutdown of sufficient duration causing the IRS to be required to push back regulatory enforcement of a statutory deadline though. Since the late 1980s, there have been numerous instances of brinkspersonship in which the government shut down -- usually for short periods of time. In light of this experience and the duration of past shutdowns, I tend to think that being overly concerned about the prospect of a prolonged shutdown is the functional equivalent of Chicken Little yelling, "The sky is falling! The sky is falling!"

Some of my clients fear a government shutdown, and other clients would welcome it.

Likewise, some of my clients think a delay, however slight, in government agencies’ guidance would harm the client’s interests; and others think a delay would advance the client’s interests.