Tag: SECURE Act 2.0

The SECURE 2.0 Act made it easier for retirement plan sponsors to correct automatic enrollment errors. As a policy matter, Congress strongly supports automatic enrollment provisions in retirement plans, and making it easier to correct errors should (hopefully) encourage retirement plan sponsors to add such features to their plans. This post focuses on the automatic enrollment correction provisions of the SECURE 2.0 Act. (For an overview of the SECURE 2.0 Act for defined contribution plan sponsors, click here.)

Correcting Automatic Enrollment Errors

Section 350 of the SECURE 2.0 Act codified a safe harbor correction for automatic enrollment errors into the Internal Revenue Code. Prior to the SECURE 2.0 Act, automatic enrollment errors were eligible for correction under EPCRS (Employee Plans Compliance Resolution System) but were often subject to a sunset provision by the IRS (although that sunset provision had been extended previously).

Continue reading “Correcting Automatic Enrollment Errors”

During our October 30, 2024 webinar, “It’s 2024 and … It’s Decision Time in the Retirement Plan World!” we polled our audience on their interest in adding optional features available under Secure Act 2.0 (discussed in our prior blog post). The results are in!

Based on the responses to our polls:

• There is very little interest in adding Pension-Linked Emergency Savings Accounts with 60 percent of respondents selecting “Strong No” and an additional 13 percent responding “Lean No,” for a total negative response rate of 73 percent.
• Similarly, a strong response against adding Emergency Personal Expense Distribution with a collective 65 percent of respondents selecting “Strong No” or “Lean No.”
• Student Loan Matching Contributions were not given a passing grade with a collective 56 percent of respondents selecting “Strong No” or “Lean No.”
• In contract, there was more interest in adding Qualified Birth or Adoption Distribution (a collective 40 percent “Strong Yes” or “Lean Yes”) and Domestic Abuse Victim Distribution (a collective 39 percent “Strong Yes” or “Lean Yes”).
• The Disaster Recovery Distribution was in the middle, with 43 percent responding “Maybe,” 29 percent not interested in adding these to their plan and 15 percent planning to add this option to their plan.

 

Continue reading “Trends in Optional Features Available Under Secure Act 2.0”

The Internal Revenue Service (IRS) has issued final regulations for required minimum distributions (RMDs) from certain retirement plans, including tax-qualified plans, Internal Revenue Code (Code) section 403(b) plans, individual retirement accounts (IRAs) and Code section 457(b) eligible deferred compensation plans. The regulations implement changes put into law by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and the SECURE 2.0 Act of 2022 (SECURE 2.0).

The final regulations apply for distribution calendar years beginning on or after January 1, 2025. However, as some of the RMD changes addressed in the final regulations already have taken effect in accordance with the effective dates set forth in the SECURE Act and SECURE 2.0, plan sponsors should review current plan operations for compliance.

Continue reading “Final Regulations Issued on Required Minimum Distributions Under SECURE Act”

Plan sponsors have been concerned about their fiduciary responsibilities for the selection of insurance companies to provide guaranteed income in their defined contribution plans, such as 401(k) plans. The SECURE Act of 2019 created an easy-to-satisfy fiduciary safe harbor to protect plan sponsors and to facilitate insured retirement income in those plans.

Read more from the Retirement Income Institute Alliance for Lifetime Income.

 

The SECURE 2.0 Act of 2022 expressed Congressional policy to encourage defined contribution plans, such as 401(k) plans, to offer insured retirement income to their participants. The Act included several provisions that ease compliance barriers when insured income products are offered in plans.

Read more from the Retirement Income Institute Alliance for Lifetime Income.

 

The SECURE 2.0 Act made sweeping changes to Internal Revenue Code (Code) and ERISA provisions governing employee benefit plans. In a recent letter to the Department of the Treasury and the Internal Revenue Service, the Chairmen and Ranking Members of the House Ways and Means Committee and the Senate Finance Committee addressed a number of ambiguities and technical errors in the SECURE 2.0 Act and signaled their intent to introduce technical correction legislation. (Exactly which errors will be fixed in such legislation remain to be seen.)

The letter pinpointed the following four provisions of the SECURE 2.0 Act and asked the IRS to implement the legislative provisions in a way that would “ensure that Congressional intent is carried out:”

Continue reading “Congressional Leaders Address SECURE 2.0 Act Glitches”

The IRS recently issued Notice 2023-43 (Notice) to provide interim guidance on Section 305 of SECURE 2.0 Act of 2022 (SECURE 2.0), which significantly expanded self-correction under the Employee Plans Compliance Resolution System (EPCRS). The Treasury Department was directed under SECURE 2.0 Section 305 to issue an updated version of EPCRS (most recently set forth in Rev. Proc. 2021-30) by December 29, 2024. The Notice is intended to provide some answers to plan sponsors in advance of the update to Rev. Proc. 2021-30.

In general, Section 305 of SECURE 2.0 broadened the scope of self-correction by permitting any eligible inadvertent failures (EIFs) to be self-corrected within a reasonable period after the failure is identified. SECURE 2.0 defines the self-correction period as indefinite, with no last day, so long as the IRS does not identify the failure before the plan sponsor takes action demonstrating a specific commitment to implement a self-correction to the failure.

Continue reading “IRS Issues Interim Guidance on SECURE 2.0 Self-Correction Expansion”

SECURE 2.0, which was included as part of the Consolidated Appropriations Act of 2023, was signed into law in late December 2022. The statute contains 92 substantive sections making reforms to a broad array of retirement-related provisions in ERISA, the Internal Revenue Code (the Code) and certain other laws. Of these 92 sections, four make changes to various aspects of the required minimum distribution (RMD) rules set forth under the Code that apply to annuities in various situations.

Continue reading “SECURE 2.0 Includes Several Changes Intended to Encourage the Use of Retirement Annuities”

The SECURE 2.0 Act of 2022 (SECURE 2.0), the follow-up legislation to the Setting Every Community Up for Retirement Enhancement Act of 2019 (now known as SECURE 1.0) (previously discussed here and here), includes many important legal changes affecting retirement plans. SECURE 2.0 is intended to expand access to retirement plans, encourage additional retirement savings and ease certain administrative burdens on retirement plan sponsors.

In a measure that substantively affects plan sponsors and alters retirement plan correction practices, SECURE 2.0 significantly expands the availability of self-correction by widening the range of operational failures for which self-correction is available, including plan loan errors.

Continue reading “SECURE 2.0 Expansion of Self-Correction Program and Plan Loan Error Corrections”