In the month since the SECURE Act 2.0 became law, retirement plan experts have been fast at work studying and researching the pages of provisions so that plan sponsors understand the requirements that will affect their plans.
On January 24, 2023, Steven Grieb, senior compliance counsel at Gallagher, presented a webcast for the International Foundation titled, Secure Act 2.0 – How Will It Impact Your Plan? Grieb began the webcast by pointing out several impactful thoughts:
- The contents of the webcast should be considered an “opening statement” on this law and not the final word.
- There are open and unanswered questions that even the experts do not know. It will be a long process to understand the details due to the sheer volume of rule changes.
- Additional guidance, including technical corrections, will be forthcoming from many government agencies.
- Some of the rule changes will be considered positive and simplify plan administration while other changes will increase complexity.
While there is much detail included on the new provisions of the SECURE Act in the webcast, there are several big-picture takeaways, including the below.
Automatic Enrollment for New Plans
Automatic enrollment will be required for new retirement plans beginning with the 2025 plan year. A new plan is one that was started on or after December 29, 2022. Plans in existence prior to December 29, 2022 are not considered new plans. IRS guidance could further clarify the definition of new plan—for example, if a plan is new or pre-existing in the situation of a transfer of assets during a business sale.
For new plans, the automatic enrollment feature must include an automatic increase of exactly 1% each year, up to a 10% maximum increase.
Paper Statement Requirements
Plans may not be happy about this one, but, effective in 2026, they will be required to send paper statements to participants. Defined contribution plans must send one per year while defined benefit plans must send statements every three years. However, participants can affirmatively elect to receive statements electronically. Further guidance is expected before 2026.
Student Loan Matching Contributions
There have been many discussions on student loan matches after one 2018 IRS private letter ruling was released for Abbott Laboratories. Beginning with the 2024 plan year, the SECURE Act 2.0 changes to the Internal Revenue Code will allow all plans to make employer matching contributions to the participant’s retirement account based on the participant’s repayment of student debt. Also, plans can rely on the participant’s certification of their payments.
The webcast is currently available and free to International Foundation and ISCEBS members. It covers many additional topics such as long-term part-time eligibility, required minimum distributions, the new lost and found database, and Roth contributions and matches, to name a few.
In addition, the International Foundation has many SECURE Act 2.0 resources available, including:
Webpage—SECURE Act 2.0
Anne Newhouse, CEBS
Information/Research Specialist at the International Foundation of Employee Benefit Plans
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