SECURE 2.0 2025 and 2026 Amendments Reference Guide and Defaults
Summarized below are optional SECURE 2.0 elections and whether they are defaulted Yes (on and permitted) or No (not permitted):
SECURE 2.0 2025 Amendment Defaults
- The Plan permits Participants to designate Employer Matching Contributions as Employer Matching Roth Contributions (Section 604) – Default is No
- Effective for contributions made after December 29, 2022, a Plan may permit Participants to designate fully vested Employer Matching and/or Non-Elective Contributions as Employer Roth Contributions. Employer Matching and/or Non-Elective Contributions designated as Employer Roth Contributions may not be excluded from the Participant's gross income.
- Effective for contributions made after December 29, 2022, a Plan may permit Participants to designate fully vested Employer Matching and/or Non-Elective Contributions as Employer Roth Contributions. Employer Matching and/or Non-Elective Contributions designated as Employer Roth Contributions may not be excluded from the Participant's gross income.
- The Plan permits Participants to designate Non-Elective Contributions as Non-Elective Roth Contributions (Section 604) – Default is No; however, the above and this provision can be accomplished by adding In Plan Roth Rollover/Transfers
- Effective for contributions made after December 29, 2022, a Plan may permit Participants to designate fully vested Employer Matching Contributions and/or Non-Elective Contributions as Employer Roth Contributions. Employer Matching and/or Non-Elective Contributions designated as Employer Roth Contributions may not be excluded from the Participant's gross income.
- Effective for contributions made after December 29, 2022, a Plan may permit Participants to designate fully vested Employer Matching Contributions and/or Non-Elective Contributions as Employer Roth Contributions. Employer Matching and/or Non-Elective Contributions designated as Employer Roth Contributions may not be excluded from the Participant's gross income.
- The Plan allows Military Spouses special eligibility, entry and vesting provisions (Section 112) – Default is No
- Military Spouse is defined as a non-highly compensated employee who is married as of the employee's date of hire to an individual who is a member of the uniformed services (as defined under section 101(a)(5) of title 10, United States Code) serving on active duty. The Plan Administrator may rely on an employee's self-certification with regard to his or her spouse's membership in the uniformed services if such certification includes the name, rank, and service branch of the spouse.
- If elected, as of the period beginning on and after the effective date, Military Spouses will have an immediate 100% vested right to the accrued benefit derived from employer contributions and, upon participating in the Plan, shall be entitled to receive employer contributions that are not less than the amount of the contributions provided to a similarly situated Participant who is not a Military Spouse after two years of service. (see more here: https://www.irs.gov/pub/irs-drop/n-24-02.pdf, section 112)
- The Plan permits matching contributions on Qualified Student Loan Payments (Section 110) – Default is No.
- Matching contributions made on account of QLSPs shall be made at the same rate that matching contributions are made on account of elective deferrals and shall vest in the same manner as matching contributions on account of elective deferrals.
- QSLPs are defined as payments made by a Participant to repay a Qualified Education Loan that was incurred by the Participant to pay for Qualified Higher Education Expenses to the extent that such payments in the aggregate do not exceed A minus B where:
- A is the lesser of the Code section 402(g) limits for the year or the Participant's compensation for the year, as defined under Code section 415(c)(3); and
- B is the elective deferrals made by the Participant for the year.
- Payments made by a Participant qualify as QSLPs only to the extent that the Participant certifies annually as to the amount of payments the Participant made during the year to repay a Qualified Education Loan incurred by the Participant to pay for Qualified Higher Education Expenses. The Plan Administrator may determine the form and manner of the certification required. Qualified Education Loan means a loan defined under Code section 221(d)(1). Qualified Higher Education Expenses means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) at an eligible educational institution (as defined in Code section 221(d)(2)).
- The Plan Administrator may, solely for purposes of meeting the requirements of Code sections 401(a)(4)(11)(B), (12), or (13) or Code sections 401(k)(11)(B)(i)(II), (12)(B), (13)(D), or (16)(D), treat QSLPs as elective deferrals or elective contributions (whichever is applicable). The Plan Administrator may, for purposes of determining whether the Plan passes the average deferral percentage test under Code section 401(k)(3)(A)(ii) for a given Plan Year, apply the test separately with regard to Participants who receive matching contributions on QSLPs.
- The Plan permits Emergency Personal Expense Distributions (Section 115) – Default is No.
- If elected, as of the effective date, a Participant may request and receive an Emergency Personal Expense Distribution ("EPED"). An EPED is a distribution of not more than the lesser of A or B where:
- A is $1,000; and
- B is the Participant's vested account balance in the Plan as of the date of distribution minus $1,000.
- No more than one EPED may be made to a Participant in any calendar year and an EPED may not be made to a Participant in the three calendar years following the calendar year in which an EPED was made to a Participant unless the prior EPED has been fully repaid to the Plan (see below) or the Participant's aggregated elective deferrals and repayments to the Plan following the last EPED are not less than the amount of the last EPED. The limitations on receipt of an EPED provided under the preceding sentence apply to all Plans of the Participant's employer and any member of a controlled group that includes the employer (e.g., if a participant participates in two or more plans of the same employer, the participant may only take one EPED from either plan in any calendar year). For this purpose, a controlled group means any group treated as a single employer under Code sections 414(b), (c), (m), or (o).
- Any amount distributed as an EPED must be for the purpose of meeting the Participant's unforeseeable or immediate financial needs related to necessary personal or family emergency expenses. The Plan Administrator may rely on a Participant's written certification that the Participant has an unforeseeable or immediate financial need related to necessary personal or family emergency expenses.
- A Participant may repay an EPED in one or more contributions to the Plan during the 3-year period that begins the day after the EPED is made to the Participant. The Plan Administrator may adopt a uniform policy that limits the number of contributions under which an EPED may be repaid.
- If elected, as of the effective date, a Participant may request and receive an Emergency Personal Expense Distribution ("EPED"). An EPED is a distribution of not more than the lesser of A or B where:
- The Plan accepts recontributions from Emergency Personal Expense Distributions (Section 115) – Default is No when 5 is No.
- If elected a Participant may repay an EPED in one or more contributions to the Plan during the 3-year period that begins the day after the EPED is made to the Participant. The Plan Administrator may adopt a uniform policy that limits the number of contributions under which an EPED may be repaid.
- If elected a Participant may repay an EPED in one or more contributions to the Plan during the 3-year period that begins the day after the EPED is made to the Participant. The Plan Administrator may adopt a uniform policy that limits the number of contributions under which an EPED may be repaid.
- The Plan permits receipt of rollovers from auto-portability providers (Section 120) – Default is No.
- If elected, as of the effective date, the Plan may receive rollovers from an auto-portability rollover provider on behalf of an active Participant who is otherwise eligible to receive Rollover Contributions under the terms of the Plan.
- The receipt of any rollovers is conditioned upon all other relevant terms of the Plan and any administrative policies. For example, the Plan will not accept auto-portability rollovers on behalf of any Participant until the Participant is otherwise eligible to receive Rollover Contributions under the Plan. Upon receipt of a rollover from an auto-portability rollover provider, the amount received will be invested in the Participant's current investment election for new contributions or, if no election is made or permitted, it will be invested in the Plan's Qualified Default Investment Alternative ("QDIA") and if the Plan does not maintain a QDIA, then in another investment selected by the fiduciary tasked with selecting the Plan's investment alternatives (which shall be the Plan Administrator if no other individual, committee, or entity has been so tasked).
- The Plan permits rollover distributions via an auto-portability provider (Section 120) – Default is No.
- If elected, as of the effective date, the Plan may permit rollover distributions via an auto-portability rollover provider on behalf of an active Participant who is otherwise eligible to rollover distributions under the terms of the Plan.
- The distribution as a rollover is conditioned upon all other relevant terms of the Plan and any administrative policies.
- The Plan permits Domestic Abuse distributions and Recontribution of distributions taken on account of Domestic Abuse (Section314) – Default is No.
- If elected, as of the effective date, a Participant who has suffered Domestic Abuse within the Applicable Period is permitted to request and receive a distribution that does not exceed the lesser of $10,000 or the Participant's vested account balance at the time of distribution. Beginning in 2025, the $10,000 limit is subject to increase due to increases in the cost of living under Code section 72(t)(2)(K)(vii).
- Domestic Abuse is defined as physical, psychological, sexual, emotional, or economic abuse, including efforts to control, isolate, humiliate, or intimidate the Participant, or to undermine the Participant's ability to reason independently, including by means of abuse of the Participant's child or another family member living in the Participant's household.
- The Applicable Period means a 1-year period beginning on any date on which the Participant is subject to Domestic Abuse by a spouse or domestic partner.
- The Plan Administrator may rely on a Participant's written certification that the Participant has suffered Domestic Abuse during the Applicable Period.
- A Participant who has received a distribution due to Domestic Abuse may repay the distribution by making one or more contributions to the Plan during the 3-year period that begins the day after the distribution occurs. The Plan Administrator may adopt a uniform policy that limits the number of contributions under which the distribution may be repaid.
- The Plan provides for distributions to Terminally Ill Participants (Section 326) – Default is No as other options to withdraw funds are permitted.
- If elected by the Plan, and as of the effective date, Section 325 of SECURE 2.0 creates an exception to the 10% early distribution penalty tax for any distribution made to a terminally ill individual, effective for distributions made after December 29, 2022.
- If a qualified plan does not permit terminally ill distributions and a Participant receives a permissible in-service distribution that meets the requirements of both the permissible in-service distribution and a terminally ill individual distribution, the Participant may treat the distribution as a terminally ill distribution on their federal tax return.
- The Plan permits recontribution of distribution from Terminally Ill Participants (Section 326) – Default is No.
- If the Plan accepts rollover contributions, then as of the effective date a Participant who receives a Terminally Ill distribution may recontribute to the Plan any portion of the distribution amount any time during the 3-year period that begins on the day after the date the terminally ill distribution was received.
- If the Plan accepts rollover contributions, then as of the effective date a Participant who receives a Terminally Ill distribution may recontribute to the Plan any portion of the distribution amount any time during the 3-year period that begins on the day after the date the terminally ill distribution was received.
- Qualified Disaster Recovery Distributions & Loans (Section 331) – Default is No.
- Loan $ Limit: If elected by the Plan, then as of the effective date, increases the maximum loan amount for qualified individuals experiencing a qualified disaster up to $100,000.
- Loan % Limit: If elected by the Plan, then as of the effective date, increases the maximum loan percentage for qualified individuals experiencing a qualified disaster up to 100% of the Participant's vested account balance (not to exceed $100,000).
- Loan Term Limit: Maximum loan repayment term can be extended by one year for qualified individuals experiencing a qualified disaster.
- Distribution (not for loans) Recontribution: If elected by the Plan, and as of the effective date, amounts withdrawn due to Qualified Disaster may be recontributed to a Plan during the 3-year period beginning on the day after the date of the distribution.
- Distribution (not for loans) Recontribution for Home Purchases: If elected by the Plan, as of the effective date, distributions to acquire a principal residence that was located in the disaster area can be recontributed if the funds were not ultimately used to acquire a residence.
- The Plan permits Pension-Linked Emergency Savings Accounts (Section 127) – Default is No.
- PLESA is a designated Roth account for a PLESA-eligible Participant (only non-Highly Compensated Employees). A contribution to a PLESA is limited to an amount that will not cause the PLESA balance to exceed $2,500 (as adjusted for inflation).
- PLESA is a designated Roth account for a PLESA-eligible Participant (only non-Highly Compensated Employees). A contribution to a PLESA is limited to an amount that will not cause the PLESA balance to exceed $2,500 (as adjusted for inflation).
- The plan will rely on participants' written self-certification for hardship withdrawals. Default is Yes.
- The Plan’s maximum involuntary force-out is increased – Default is Yes
- If elected, as of the effective date, the Plan may increase the vested account balance subject to involuntary force-out to a maximum of $7,000.
- If elected, as of the effective date, the Plan may increase the vested account balance subject to involuntary force-out to a maximum of $7,000.
- The Plan allows modifications to the default LTPT Employee provisions listed in the Standard Provisions – Default is Yes, selected options.
- Defaults:
- Eligibility Computation Period does switch to Plan Year
- Age: 21
- Entry: semi-annual entry
- LTPT may make pre-tax Elective Deferrals, Roth, and Catch-up Contributions
- LTPT may take loans
- LTPT are exempt from top-heavy and are not included in testing.
- NOTE: For any plans subject to a Mandatory Eligible Automatic Contribution Arrangement, regardless of selections made in the Optional Provisions, LTPT Employees who are Covered Employees must be automatically enrolled. See Standard Provision K in the SECURE 2.0 Amendment for more details.
- Defaults:
- LTPT Employees are included in nondiscrimination and coverage tests – Default is No
- For any Plan Year in which the Plan is intended to satisfy the ADP or ACP safe harbor provisions of Code sections 401(k)(12), or 401(m)(11) or (12), LTPT Employees will typically be excluded from the nondiscrimination and coverage tests under Code sections 401(a)(4), 401(k)(4), 401(m)(2) and 410(b).
- LTPT Employees do NOT share in Employer Matching Contributions – Default is Yes
- LTPT Employees will not be eligible for any Employer Matching contributions.
- Highly Paid Individuals: For purposes of determining status/applicability of mandatory Roth Catch-Up Contribution rules, FICA wages will be counted from more than just an Employee's common-law employer – Default is No
- Some Employees are prohibited from making Catch-Up Contributions – Default is No
- All participants aged 60 - 63 are excluded from the Enhanced Catch-up Limit – Default is No
- By default, if the Plan permits catch-up contributions starting at age 50, it permits higher catch-up contributions for participants aged 60-63.
- The Plan allows for Qualified Long-Term Care Distributions – Default is No.
SECURE 2.0 2026 Amendment Defaults
- Use the Plan's existing Payment upon Death provision for Eligible Designated Beneficiaries; SECURE timing rules and defaults do not apply. Default is No.
- If elected, this indicates that distribution upon death of a Participant will be made solely in accordance with the Plan's existing payment provision, as elected in the Adoption Agreement (see Section F.9, "Payment upon Participant's Death").
- When this option is selected the SECURE distribution timing rules (e.g. 10-Year Rule or Life Expectancy Rule) and any default timing rule do not apply.
- NOTE: Plan Sponsors should review their election under Section F.9 to confirm that the selected payment provision reflects the intended distribution timing upon death for all Beneficiaries.
- Restrict SECURE Payment upon Death distribution timing options for EDBs, or designate a default timing rule other than the 10-Year Rule. Default is No.
- If elected, the Plan will limit the distribution timing rules available to Eligible Designated Beneficiaries ("EDBs") for deaths occurring prior to the applicable Required Beginning Date. Selecting "No" will allow all options to be permitted for EDBs.
- If elected, the Plan will limit the distribution timing rules available to Eligible Designated Beneficiaries ("EDBs") for deaths occurring prior to the applicable Required Beginning Date. Selecting "No" will allow all options to be permitted for EDBs.
- Use the Plan's existing Payment upon Death provision for Non-Eligible Designated Beneficiaries; SECURE timing rules and defaults do not apply. Default is No.
- If elected, it indicates that distributions upon death of a Participant for Beneficiaries who are not Eligible Designated Beneficiaries will be made solely in accordance with the Plan's existing payment provisions, as elected in the Adoption Agreement (see Section F.9, "Payment upon Participant's Death").
- When this option is selected, the SECURE 2.0 distribution timing rules applicable to Non-Eligible Designated Beneficiaries (e.g., the 5-Year Rule or 10-Year Rule) and any default timing rule do not apply.
- NOTE: Plan sponsors should review their Adoption Agreement election under Section F.9 to confirm that the selected payment provision reflects the intended distribution timing for all Beneficiaries.
- Restrict SECURE Payment upon Death distribution timing options for Non-EDBs, or designate a default timing rule other than the 10-Year Rule. Default is No.
- If elected, Designated Beneficiaries who are not Eligible Designated Beneficiaries will be restricted from using certain distribution timing rules under the Plan. Select "No" if all allowable options will be permitted for Designated Beneficiaries who are not Eligible Designated Beneficiaries.
- If elected, Designated Beneficiaries who are not Eligible Designated Beneficiaries will be restricted from using certain distribution timing rules under the Plan. Select "No" if all allowable options will be permitted for Designated Beneficiaries who are not Eligible Designated Beneficiaries.
- The Plan is a Pooled Employer Plan ("PEP") and the Pooled Plan Provider ("PPP") is the Plan Sponsor
- Pooled Employer Plan ("PEP") is a Multiple Employer Plan where the Pooled Plan Provider ("PPP") is a Named Fiduciary (see defined term in the Standard Provisions section).
- If the Plan is a PEP, then the Plan Sponsor is the PPP, which is also a Named Fiduciary and Plan Administrator.