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February 22, 2023 at 05:34 PM
J.Mark Iwry has played a major role in designing the laws and regulations that shape your clients’ retirement finances.
Today, he’s getting extra attention because of his decades of experience with programs expanded by the new Setting Every Community Up for Retirement Enhancement Act, or Secure 2.0, which came to life in December.
Iwry is a former senior advisor to the Secretary of the Treasury. He now serves as a nonresident senior fellow at the Brookings Institution and as a visiting scholar at the Wharton School.
He started out by attending Harvard, where he earned a bachelor’s degree, a law degree, and a master’s degree in public policy.
From 1992 through 2001, and then from 2009 through 2017, he served as an official at the U.S. Treasury Department, which is the parent of the Internal Revenue Service.
In the Obama-Biden administration, he served as senior advisor to the secretary of the Treasury and deputy assistant secretary for retirement and health policy, overseeing the regulation of the private pension system and playing a big role in the implementation of the Affordable Care Act.
Iwry also has practiced law, as a partner at Covington & Burling and later as of counsel to Sullivan & Cromwell. He has been a research professor at Georgetown University, an adjunct faculty member at George Washington University law school, and a senior advisor to AARP, in addition to holding his positions at Brookings and Wharton.
While at Treasury, he led Executive Branch efforts to put together frameworks for new types of benefit arrangements, to expand retirement plan coverage and economic security, especially for lower-income workers, racial minorities, and women.
In 1998 he developed and led Treasury’s initiative to define, approve, and promote automatic (“opt-out”) enrollment in 401(k) plans, together with other automatic features. He also developed or co-authored the saver’s tax credit, which is used by about 10 million savers; the SIMPLE-IRA plan, which is used by about 3 million savers; the startup tax credit for small businesses that adopt a retirement plan; and provisions that promote pension portability, such as mechanisms that support automatic rollovers from employer plans.
Another provision Iwry helped create, the “qualified longevity annuity contract,” was part of an Iwry initiative to “put the pension back in the private pension system.”
The QLAC is a deferred income annuity that’s designed to provide affordable longevity protection for retirement savers with 401(k) plan, 403(b) plan or IRA assets, by starting a lifetime stream of benefits payments only when a saver reaches a specified trigger age, such as 80 or 85. QLACs can be provided on a joint and survivor basis to protect both spouses for life, or can include a feature for repaying the premium when the purchaser dies at a younger age.
Many Secure 2.0 provisions expand provisions and programs that Iwry helped set up, and Iwry helped design and draft a number of the Secure 2.0 provisions.
Secure 2.0 section 202, for example, will increase the amount an IRA holder or 401(k) plan participant can contribute to a QLAC to $200,000, from what was originally $125,000.
Iwry answered questions via email about the teams from Treasury, the U.S. Department of Labor’s Employee Benefits Security Administration and other federal agencies that will bring the QLAC changes and other Secure 2.0 provisions to life.
The interview has been condensed and edited.
THINKADVISOR: Roughly how many Treasury and IRS people might be involved with writing Secure 2.0 regulations, and roughly how many EBSA people? Thousands? Hundreds?
MARK IWRY: Nothing like thousands or hundreds. Numbers like those apply to the people in the field — doing investigations and audits, enforcement, administration, reviewing and approving applications, processing tax returns and refunds, etc.
As for how many people are writing the regulations for EBSA and IRS, you’d think perhaps the number of people might increase over the years, as the law is becoming more complex all the time and the development of high-quality regulations is labor-intensive. But actually, the number of people engaged in writing regulations always seems to be the same: namely, half as many people as they feel are needed.
I’d guess it’s probably close to a dozen, or maybe a few more working on EBSA regulations, and maybe a couple dozen working on regulations at IRS and Treasury.
How do the agencies interact?
Jurisdiction over retirement policy is split between the Labor Department and the Treasury/IRS, reflecting the jurisdictional divide between the congressional labor committees and tax-writing committees. Many of the rules are actually repeated verbatim in both the tax code and the labor laws (the Employee Retirement Income Security Act).
So one day in the mid-1970s, the two top officials in charge of retirement at the two agencies met for lunch and agreed on how to allocate and coordinate responsibilities — memorialized on a paper napkin.
Congress later codified the napkin treaty in legislation that allocates between the Treasury and Labor Departments the authority to interpret and administer each of the pertinent legislative provisions.
On the tax side, people often confusingly refer to the IRS and Treasury separately. But the IRS is part of Treasury. Can you sort that out for us?
Yes, the IRS is an agency that is part of the Treasury Department — in fact, its single largest component.
References to “Treasury” (as distinct from IRS) generally refer to another component of the Treasury Department: the Office of Tax Policy, which works hand-in-glove with the IRS in interpreting and implementing the tax code by co-authoring regulations and other guidance.
The Office of Tax Policy, in turn, includes an Office of the Benefits Tax Counsel — six or seven lawyers and a pension actuary — that is responsible for the tax aspects of pensions, retirement savings, health care and other employee benefits.
When it comes to developing regulations interpreting retirement legislation like Secure 2.0, this small but very expert Benefits Tax Counsel group at Treasury teams up with highly skilled IRS lawyers who specialize in employee plans and employee benefits.
What happens if the IRS and Treasury groups disagree?
They work it out.
It’s less than a 10-minute walk between the Treasury building (next door to the White House) and the IRS headquarters on Constitution Avenue. The Treasury people shuttle between the two buildings all the time.
Ultimately, the IRS decides how the tax laws, including those relating to retirement, are administered and how they apply to particular firms or individual taxpayers.
