We knew it was coming, it was just a matter of when.
The SECURE Act 2.0 was signed into legislation on December 29th, 2022. Included in this law were several provisions that are either retroactive or became effective as of the date the legislation was signed and many that will be effective in the next several years.
We have put together a list of the most prominent changes that you need to be aware of right now.
Changes effective now:
Tax credit of 100% for the start-up of new retirement plans for small businesses beginning for plans started after 12/31/22.
Reduction in excise tax for failing to take RMDs timely beginning for tax years after 12/31/22.
Repayment of qualified birth or adoption distributions are limited to 3 years, effective for distributions made after 12/31/19.
Increase in age for required start date of RMDs; for anyone reaching age 72 after 12/31/22 and age 73 before 1/1/2033, the applicable age will be 73. Participants turning 74 after 12/31/32, the applicable age will be 75.
Employer may rely on employee certifying that deemed hardship distribution conditions are met; effective for plan years beginning after 12/29/22.
Changes effective at a future date
Beginning in 2024, employers can opt to provide a match to employees who are making payments to a qualified student loan.
Effective for plan years beginning after 12/31/24, all new 401(k) and 403(b) plans must include an auto-enrollment feature.
Effective 1/1/24, all catch-up contributions made by participants with compensation exceeding $145,000 must be made as ROTH. All participants under this compensation level must be given the opportunity to make their catch-up contributions as ROTH.
Long term part-time employees who have reached age 21 and worked 2 consecutive 12 month periods beginning January 1, 2023 will be allowed to defer to a qualified plan in accordance with the plans existing entry dates.
Mandatory cash-outs of a terminated participant's vested account increases from $5,000 to $7,000 for plan years beginning after 12/31/23.
In-service withdrawals permitted for victims of domestic abuse for distributions after 12/31/23.
In-service withdrawals for emergency expenses penalty free. Either in the form of a traditional in-service distribution or by way of a pension-linked emergency savings account; both beginning after 12/31/23.
Please note that this is intended as a summary and is not a complete list of provisions. We will be sending out additional information on these changes as it becomes available along with guidance on changes with future effective dates.
If you have questions, please don't hesitate to reach out to us.