SECURE Act 2.0
Summary of Key Changes
SECURE 2.0 made considerable changes to many different areas of retirement plan administration. To help decipher the key changes and effective dates of the changes laid out across multiple years, this summary explains what is changing and when it happened or is happening, and will provide tips and guidance you may find useful.
Timeline with Effective Dates:
Effective Upon Signing (12/29/22)
- Required minimum distribution (RMD) age increase
- Expansion of IRS self-correction program
- New in-service distribution option and loan modification for qualified disaster distributions (effective for distributions made after 1/26/21)
- Early withdrawal penalty waiver for distribution to terminally ill participants (not a new distribution option)
- Fiduciary relief for not attempting to recover overpayments
Effective in 2023
- Change to Form 5500 filing – large plan determination (requiring an audit) changed to counting just participants with balances instead of all eligible participants
- Ability to fund matching or non-elective contributions as Roth
- Increase in tax credits for plan start-up costs for small employers
- Addition of tax credits for employer contributions for small employers
- Participants allowed to self-certify a safe harbor hardship event
- Easing of restrictions for cash balance plans using variable interest crediting rates
- Limited 401(k) plan disclosures for unenrolled participants
- Ability to offer financial incentives up to $250 to boost 401(k) participation
Effective in 2024
- Increase in force-out distribution threshold from $5,000 to $7,000
- Catch-up contributions for participants making over $145,000 must be Roth (delayed until after 12/31/25 by IRS Notice 2023-62)
- Long-term, part-time (LTPT) employees eligible to defer into the plan after 3 consecutive periods of 500 hours per year
- Matching contributions allowed for student loan payments
- New in-service distribution option for emergency expenses
- New in-service distribution option for victims of domestic abuse
- Allow a pension-linked emergency savings account (PLESA) for non-highly compensated employees
- New “Starter-K” plan design that allows deferrals, but no employer contributions
- Discretionary amendments to allow increased contributions or accrued benefits, until employer tax filing deadline with extensions
- When determining controlled group status, spousal attribution exception permitted even with minor child or residing in community property state
- Separate top-heavy testing for otherwise excludable employees
- Expansion of hardship distributions from 403(b) plans
- Increase in contribution limits for SIMPLE plans
Effective in 2025
- Automatic enrollment feature required for 401(k) and 403(b) plans unless an exception applies
- Long-term, part-time (LTPT) employees eligible to defer into the plan after 2 consecutive periods of 500 hours per year
- Catch-up contribution limit for participants ages 60 to 63 increased to 150% of indexed limit
- IRS and Department of Labor to establish an online searchable database for participants to re-connect with any lost account balances
Effective in 2026
- New in-service distribution option for long-term care insurance premiums
- Defined contribution plans must provide annual paper benefit statement; defined benefit plans must provide paper benefit statement every 3 years
Effective in 2027
- IRS Saver’s credit changes from a tax credit to a matching contribution to a plan or IRA
We will update this summary when more information is released, so be sure to check back frequently.
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