Do employee-benefits practitioners care about a government shutdown?

Does EBSA or IRS do something we as employee-benefit practitioners need (that would be delayed by a U.S. government shutdown)? Or does our work not depend on the executive agencies?

(We likely care as citizens, many might care about friends and neighbors who could be without paychecks for a while, and some might care as investors.)

In the law of U.S. government shutdowns, some executive agency functions are treated as essential, allowing a government employee to keep working; but nonessential functions don’t get that tolerance. For example, about 70% of Treasury employees are not permitted to work. In some agencies, it’s around 95% of employees. Further, many executives play “out of position”, taking on emergency functions and unusual activities.

A shutdown precludes work on writing rules, regulations, and other guidance; issuing ERISA advisory opinions or IRS letter rulings and other written determinations; almost all legal advice (except as needed for EBSA or IRS to preserve the U.S. government’s rights and other property); and customer service.

But have the guidance-writing functions become so sparse that we no longer depend on them?

What about review of VCP applications, and determination letter applications for terminated plans and the upcoming DB cycle 3 restatement deadline for modified language adopters? VCPs and plan termination d-letters already face a serious backlog and time delay and now add on the cycle 3 and who knows what that does to timing. Maybe those reviews continue as critical, I don't know but I'm guessing not.

Thank you for adding some helpful information.

Please recognize this is an ignorant, and so innocent, question (because I lack experience with the correction programs):

If one has submitted an application so as to get a program’s relief from what otherwise could happen on EBSA’s investigation or an IRS examination, does it matter much—to one’s client, or to the practitioner herself—when the closing letter comes?

Consider also the timing:  the next 2 weeks are holiday weeks (meaning very little gets done in a normal year), and this is the end of an administration (meaning little regulatory/guidance work would be issued over the next month -- or more).

Last shutdown was December 22 2018 - January 25, 2019 -- maybe somebody knows what happened then?

That 34 days’ shutdown delayed some guidance, but I don’t remember that practitioners were particularly upset.

23 hours ago, Peter Gulia said:

If one has submitted an application so as to get a program’s relief from what otherwise could happen on EBSA’s investigation or an IRS examination, does it matter much—to one’s client, or to the practitioner herself—when the closing letter comes?

I don't have a ton of experience on these but I suspect not. If the filing has been made, can be proven/documented, and correction measures were of the pre-approved sort, then I see no issues if such a letter was delayed. If the desired correction was more aggressive or "outside the box" then if there was an examination before a closing letter was received, either the issue would be deferred to the EPCRS process and excluded or the EPCRS application maybe gets accelerated into the examination and resolved then. 

If you know the issue is resolved and just need the letter, even less an issue I would say. The potential downside for a client on delayed closing letter receipt is if they are waiting on letter before completing a relevant correction and the passage of time results in an increased cost of correction (e.g., attributable earnings).

For what it is worth, since 1982 I have been on the wholesale side of the group business, working with many brokers of all types.  I cannot recall anyone complaining during any of the shutdowns.  

When there is a US government shutdown not only are many Federal employees put on furlough but also some government contractors might furlough some employees if the shutdown is more than a few days and it slows down the contractor’s performance (because, for example, overseeing government people are unavailable to give approvals or change instructions).

Some practitioners might need to relearn some tax law and plan rules about what to do regarding a participant who is not severed from employment and is not on a leave but is not currently working.

The “American Relief Act, 2025” is law. https://www.congress.gov/118/bills/hr10545/BILLS-118hr10545eh.pdf

The next shutdown threat is March 14, 2025.