The proposed reg is welcome as a purely technical and structural matter. But the relief may be mostly illusory. The “bad apple” problem has always sounded worse than it is and may have been able to be  fixed by a simple adjustment to the Maximum penalty Amount rules under EPCRS, and to the rules as to who should be responsible for that penalty.

But the IRS proposal only really addresses small part of what actually happens when a plan is forcibly spun off, which may take a significant regulatory effort-especially if RESA/SECURE become law.
Continue Reading The Illusory Benefit of the IRS’s Proposed Correction to the MEP “One Bad Apple” Rule