The SECURE 2.0 Act of 2022 was signed into law on Dec. 29, 2022, as part of the Consolidated Appropriations Act. SECURE 2.0 is a big change to the regulations surrounding 401(k), 403(b) and Cash Balance Plans. There are 90 provision changes, and the law is over 350 pages! As you would expect with a law this big, much of this legislation will require clarification, small technical corrections, or opinions on actual implementation procedures from the Department of Labor (DOL) & IRS.
This breakdown offers some of the highlights most important to business owners we work with, and here are three reasons you should consider discussing new plan opportunities with a professional.
We will continue to monitor this law and changes that impact the plans we manage today. Some clients may need to adjust their plan rules to ensure their retirement plan operates as they want it to. Luckily, most provisions don’t go into effect immediately (some don’t until 2027), so we have time. The new opportunities are relevant to everyone, so we will be sure to bring ideas to clients at our regular meetings. We'll help you weigh the pros and cons of new provisions to understand the full scope before jumping in.
If you are a current client of Plancorp and have questions, we encourage you to reach out to the Retirement Plan team at Plancorp. We’ll help review your questions and ensure you receive the necessary information.
If you’re not a Plancorp client, our team would love to discuss your company and retirement plan. We may be able to help you manage these new regulations. Please schedule a time to talk with us through this link.
Matt Basiden
Director of Retirement Plan Advisors
This section outlines what is most important for those starting a new retirement plan at their company.
Starting a retirement plan is a key component for businesses of any size looking to invest in the future of their workforce.
If you are starting a new retirement plan in 2023 or later, the SECURE Act 2.0 has added some complexity and new opportunities to consider. If you're in any doubt, get in touch with us.
Expanding Automatic Enrollment
Effective for plan years beginning after 12/31/2024
Affects new 401(k), 403(b) plans, MEPS and PEPs
Required
Increase Plan Startup Credits for Small Employers
Effective for plan years after 12/31/2022 (additionally retroactive to 2020)
Optional
Percentage | Years |
100% | Years 1 & 2 |
75% | Year 3 |
50% | Year 4 |
25% | Year 5 |
0% | Year 6+ |
Retroactive Sole Proprietor Deferrals
Effective for plan years beginning after 12/29/2022
Affects sole proprietors & single-member LLCs with no employees and is only applicable in plan's first year
Optional
New Starter 401(k)
Effective for plan years beginning after 12/31/2023
Optional
This section outlines what changes are required by the SECURE Act 2.0 for existing plans.
Long-Time Part-Time (LTPT) Employee Coverage
Effective for plan years beginning after 12/31/2024 (though may affect plans earlier)
Affects 401(k), ERISA 403(b), MEP & PEP plans
Required
Catch Ups Must be Roth
Effective for tax years after 12/31/2023
Effects 401(k), 403(b), MEP & PEP plans
Required
Increase in Catch-Up Limits
Effective for taxable years beginning after 12/31/2024
Affects 401(k), 403(b), 457(b), MEP & PEP plans
Required
Paper statements
Effective for plan years after 12/31/2025
Effects 401(k), 403(b), Defined Benefit, MEP & PEP plans
Required
The SECURE Act 2.0 has developed a plethora of new options for existing plans designed to help encourage more retirement investing across the board. Here are some highlights.
Roth Employer Contributions
Effective after enactment (12/29/2022)
Affects 401(k), 403(b), governmental 457(b), MEP & PEP plans
Optional for plans and employees
Student Loan Matching
Effective for plan years after 12/31/2023
Affects 401(k), 403(b), 457(b), MEP & PEP Plans; SIMPLE IRA plans
Optional
Increase Cash-Out Limit
Effective for tax years after 12/31/2023
Affects 401(k), 403(b), MEP & PEP plans
Optional
Small Deferral incentives Allowed
Effective for plan years after 12/29/2022
Affects 401(k), 403(b), MEP & PEP plans
Optional
Emergency Savings Accounts (“ESAs”)
Effective for plan years beginning after 12/31/2023
Affects 401(k), 403(b), MEP & PEP plans
Optional
Retroactive Increase in employer contribution
Effective for plan years after 12/31/2023
Affects 401(k), 403(b), MEP & PEP plans
Optional
Distribution changes within the SECURE Act 2.0 primarily expand on regulations from the original version of the 2019 act. Understanding these opportunities can help employees through a variety of turbulent times.
Qualified Birth & Adoption Distributions (“QBADs”)
Effective active after enactment (12/29/2022)
Affects 401(k), 403(b), Governmental 457(b), MEP & PEP plans
Optional
Emergency Distributions
Effective active after enactment (12/29/2022)
Affects 401(k), 403(b), Governmental 457(b), MEP & PEP plans
Optional
Hardship Distribution Certification
Effective for plan years after date of enactment (12/29/2022)
Affects 401(k), 403(b), 457(b), MEP & PEP plans
Optional
Permanent Disaster Relief
Effective for disasters occurring after 1/26/2021
Affects 401(k), 403(b), MEP & PEP plans
Optional
Domestic Abuse Victims Distributions
Effective for plan years after 12/31/2023
Affects 401(k), 403(b), Governmental 457(b), MEP & PE plans
Optional
Terminal Illness Distribution
Effective as of enactment date (12/29/2022)
Affects 401(k), 403(b), Governmental 457(b), MEP & PEP plans
Required
Distributions for Long-Term Care
Effective for distributions made after 12/29/2025
Affects 401(k), 403(b), Governmental 457(b), MEP and PEP plans
Optional
This is where we get into the weeds, but understanding these technical rules is an important aspect of ensuring your retirement plan is compliant and that you are not inadvertently exposed to legal risk.
Spousal/Child Attribution Fix
Effective for plan years after 12/31/2023
Affects 401(k), 403(b), Defined Benefit, MEP & PEP plan
Required
Plan Amendments
Last day of first plan year beginning on or after 1/1/2025
Affects 401(k), 403(b), 457(b), MEP & PEP plans
Optional
Retirement Savings Lost and Found
Must be created by 12/31/2024
Affects 401(k), 403(b), Defined Benefit, MEP & PEP plans
Required
Elimination of Penalty on Distributions of Earnings on Excess Contributions
Affects 401(k), 403(b), Governmental 457(b), MEP and PEP plans
Effective after enactment (12/29/2022)
Auto-Portability
Effective for transactions after 12/29/2023
Affects 401(k), 403(b), Governmental 457(b), MEP and PEP plans
Optional
Reduced Participant Disclosures for Unenrolled Participants
Effective for plan years after 12/31/2022
Optional
Savers Match
Effective for tax years after 12/31/2026
Affects 401(k), 403(b), Governmental 457(b), MEP and PEP plans
Filing Status | 50% Match | 0% Match |
Joint | $41,000 | $71,000 |
Head of Household | $30,750 | $53,250 |
Single/Married Filing Separately | $20,500 | $35,500 |
Over-paying for fees can drag on your company's retirement plan potential. We are happy to provide a fee appraisal at no cost, allowing you to understand better where your plan benchmarks in terms of fees. Learn more.
These are changes to ensure your workforce is aware of, particularly if they are in the last decade before retirement.
Increased Required Minimum Distribution (“RMD”) Age
Effective for tax year 2023
Affects 401(k), 403(b), MEP & PEP plans, as well as IRAs
Reduced RMD Excise Tax
Effective for tax years after 12/29/2022
Affects 401(k), 403(b), 457(b), MEP & PEP plans, as well as IRAs
Statue of Limitations Penalties for RMDs and Excess Contributions
Effective active after enactment (12/29/2022)
Surviving Spouse RMDs
Effective for plan years after 12/31/2023
Effects 401(k), 403(b), MEP & PEP plans
Optional
No lifetime Required Minimum Distributions from Roth Plans
Effective for tax years after 12/31/2023
Effects 401(k), 403(b), MEP & PEP plans
Required
Retirement plans for nonprofits come with unique guidelines and opportunities, some of which were updated in the SECURE Act 2.0.
Hardship Distributions from 403(b)
Effective for plan years beginning after 12/31/2023
Optional
403(b) MEPS/PEPs Allowed
Effective for tax years after 12/31/2022
Optional
403(b) Investments
Effective after enactment (12/29/2022)
Optional
10% Higher Deferrals for SIMPLE IRAs and SIMPLE 401(k)s
Effective for tax years after 12/31/2023
Optional
SEP & SIMPLE Roth IRAs
Effective for tax years after 12/31/2022
Optional
Additional Nonelective employer contribution for SIMPLE IRA and SIMPLE 401(k)
Effective for tax years after 12/31/2023
Optional
Mid-year conversion from SIMPLE IRA to Safe Harbor 401(k)
Effective for plan years after 12/31/2023
Optional
This is an update not necessarily specific to retirement plans, but ones you should be aware of.
Catch-Up Contributions
Effective for tax years after 12/31/2023
IRAs
While much of the 350-page bill is outlined in this guide, there are unique or niche changes that we can discuss during a discovery call. If any of the topics below are important to your plan, please get in touch.
Don't let the many changes in the SECURE Act 2.0 overwhelm you. Plancorp is here to help. Whether your benefits team needs support tracking or implementing changes, or you are looking for a plug-and-play solution, we can help.
Let's jump on a call. Schedule time with me here.
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This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
Plancorp is a registered investment advisor with the Securities and Exchange Commission ("SEC") and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not imply a certain level of skill or training. Please refer to our Form ADV Part 2A disclosure brochure and our Form CRS for additional information regarding the qualifications and business practices of Plancorp.
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