The SECURE 2.0 Act of 2022 (SECURE 2.0) builds on the improvements made by the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) of 2019 with more than 90 changes affecting Qualified Retirement Plans, IRAs, SIMPLEs, SEPs, and others.

As IRS and DOL guidance is expected on several provisions below, we will provide periodic updates to this resource page as information becomes available.

Last Updated: 10/17/2023

Automatic Enrollment & Automatic Escalation

Expanding Automatic Features: Automatic Enrollment

Effective:
Plan Years beginning after 2024.

What's Changing:
In 2025, employers offering new 401(k) and 403(b) plans will be required to automatically enroll workers at 3% to 10% of the employee's pay.

Automatic Enrollment is a powerful tool for retirement plan. To learn more about this feature, please refer to this post prior to the mandate: Is Automatic Enrollment A...

Expanding Automatic Features: Automatic Escalation 

Effective:
Plan Years beginning after 2024.

What's Changing:
In addition to automatic enrollment, automatic escalation will also be required for these plans.

Escalation increases contributions by 1% per year up to 10% to 15% of participant compensation.

For example: If you have an automatic enrollment set to 5% you will have to include automatic escalation in 1% increments per year up to 10% or 15% maximum.

Required Large Filer Independent Plan Audits

Audit Counts and Audit Threshold Determination

Effective: 
Starting with the 2023 Plan Year

What's Changed:
Qualified Plans that are, or would otherwise be, subject to an independent CPA Audit of their plan will now be subject to a lower more favorable limit and audit determination.

Traditionally, plans that exceeded a participant count of 120 as of the first day of the plan year were subject to an Audit for that year. The participant count in this situation includes those eligible participants with and without an account as well as those terminated participant with accounts. Going forward, the count is based solely on the number of participant account balances as of the first day of the plan year. 

Examples

January 1, 2023 Counts for a 12/31 Plan Year End 401(k) Plan (prior year total was less than 100)
Active Participants (Eligible) With Accounts: 50
Active Participants (Eligible) Without Accounts: 50
Terminated Participants With Accounts: 30
Total Participant Count for Audit (01/01/2023): 130 (50 + 50 + 30)
Result: Under the former ruling, this plan would be subject to an Audit for this plan year. 

Under the new ruling, the counts are determined as follows:
January 1, 2023 Counts for a 12/31 Plan Year End 401(k) Plan (prior year total was less than 100)
Active Participants (Eligible) With Accounts: 50
Active Participants (Eligible) Without Accounts: 50 (not considered)
Terminated Participants With Accounts: 30
Total Participant Count for Audit (01/01/2023): 80 (50 + 30)
Result: The plan is now NOT subject to an Audit.

ROTH Contributions

IRS Update Roth

On August 25, 2023, the Internal Revenue Service issued Notice 2023-62 providing guidance on Section 603 of SECURE 2.0. The Notice provides an administrative transition period until January 1, 2026, to the requirement that catch-up contributions for individuals with FICA compensation in excess of $145,000 be made in the form of a Roth contribution.

Per the Notice, until taxable years beginning after December 31, 2025, catch-up contributions will be treated as satisfying the requirements of Section 603 of SECURE 2.0, even if the contributions are not designated as Roth contributions, and a plan that does not provide for designated Roth contributions will be treated as satisfying the requirements of Section 603 of SECURE 2.0.

Uniglobal will adjust the implementation of this provision to the delayed effective date. Please note, if you informed Uniglobal of your intent to add Roth to comply with this provision effective January 1, 2024, your dedicated Plan Consultant will reach out with further guidance on how to proceed. If you elected to remove catch-up, unless we hear otherwise from you, we will make that change effective January 1, 2026. 

Treatment of Roth and Catch-Up Contributions

Required Roth Treatment for Catch-Up Contributions

Originally Effective:
Tax Years Beginning After 2023

Updated Effective Date: 
Tax Years Beginning After 2025

What is Changing: 
Plan Participants that have prior year FICA wages from the employer of $145,000 or higher (as will be adjusted in the future for inflation) their catch-up contributions to qualified retirement plans are required to be ROTH Contributions, even if regular contributions are pre-tax.

Plan Participants that have prior year FICA wages from the employer less than $145,000 (as will be adjusted in the future for inflation) are exempt and can elect pre-tax or ROTH catch-up contributions provided they are made available by the Plan.

Additional Roth Enhancements

Effective:
Plan Years after 2023, for 401(k), 403(b), and governmental 457(b) plans the following are included:

What is Changing:
Roth distributions are no longer subject to RMD rules
, aligning with Roth IRAs.

What is Changing:
Roth option available for employer contributions.
Previously available only as pretax, employers now have the option to allow employees to decide whether to take employer matching and non-elective contributions on a Roth after-tax or pretax basis. The employer may deduct Roth contributions, but employees take Roth contributions as income, and contributions and earnings would be subject to normal Roth rules thereafter.

Catch-Up Contributions

Increased Catch-Up Contribution Amounts

Effective:
Plan Years after 2024

What's Changing:
Starting in 2025, individuals of ages 60 to 63 will have increased catch-up contribution limits; capped at the greater of $10,000, or 50% more than the regular catch-up amount for the year.

The catch-up contribution maximum for employees age 50+ is $7,500 for 2023 ($3,500 for SIMPLE plans) and adjusted for inflation annually. Beginning in 2025, employees age 60–63 will have a higher catch-up limit — 50% more than the regular catch-up limit or $10,000 more, whichever is greater.

SIMPLE Provisions

SIMPLE IRA and SIMPLE 401(k) Changes Ahead
Increased Participant Contribution Limits

Effective:
Plan Years/Taxable Calendar Years beginning after December 31, 2023.

What's Changing:
The SIMPLE plan contribution and catch-up limits (adjusted for inflation; $15,500 and $3,500 for 2023) are increased 10% for employers with 25 or fewer employees. Employers with 26–100 employees qualify for the higher limits only if they provide a dollar-for-dollar matching contribution up to 4% of compensation or a 3% non-elective employer contribution (up from regular requirements of 3% and 2%, respectively). 

Increased Employer Contribution Limits

Effective:
Plan Years/Taxable Calendar Years beginning after December 31, 2023.

What's Changing:
Employers with SIMPLE plans have the option of making non-elective contributions above the currently required contributions (non-elective or matching) to each employee in a uniform manner, up to the lesser of $5,000 or 10% of compensation.

Increased Participant Contribution Limits (2025)

Effective:
Plan Years/Taxable Calendar Years beginning after December 31, 2024.

What's Changing:
The catch-up contribution maximum for employees age 50+ is $3,500 for SIMPLE plans and adjusted for inflation annually. Beginning in 2025, employees age 60–63 will have a higher catch-up limit — 50% more than the regular catch-up limit or $10,000 more, whichever is greater.

 
SIMPLE to Safe Harbor 401(k) in the Same Year

Effective:
Plan Years/Taxable Calendar Years beginning after December 31, 2023.

What's Changing:
SIMPLE IRA's can convert mid-year to a Safe Harbor 401(k). They no longer have to wait until the calendar year ends to start a 401(k) plan. 

SIMPLE 2-Year Period for Rollovers - Waiver In Case of Plan Conversion to 401(k) or 403(b)

Effective:
Plan Years/Taxable Calendar Years beginning after December 31, 2023.

What's Changing:
Participants who have not yet met the 2-year period provision of the SIMPLE IRA plan under Section 72(t)(6) will be able to roll over their account, without penalty, if the Employer is converting from a SIMPLE IRA to a Safe Harbor 401(k) or a 403(b) plan (that meets 403(b)(12) requirements) after 12/31/2023.

The new plan must also subject the rollover accounts to the distribution rules for the waiver to apply. Such rules include not being able to withdraw the account unless on account of severance of employment, death, disability, hardship, etc..

Section 72(t)(6) was expanded to include Section 72(t)(6)(A) and (B). Is is subparagraph B that permits this and states the following for plan years beginning after December 31, 2023: 

"In the case of an employee of an employer which terminates the qualified salary reduction arrangement of the employer under section 408(p) and establishes a qualified cash or deferred arrangement described in section 401(k) or purchases annuity contracts described in section 403(b), subparagraph (A) shall not apply to any amount which is paid in a rollover contribution described in section 408(d)(3) into a qualified trust under section 401(k) (but only if such contribution is subsequently subject to the rules of section 401(k)(2)(B)) or an annuity contract described in section 403(b) (but only if such contribution is subsequently subject to the rules of section 403(b)(12)) for the benefit of the employee." (source: Public Law 117 - 328 - Consolidated Appropriations Act, 2023)

 

Required Minimum Distributions (RMDs)

RMD Age Increase

RMDs (required minimum distributions) for individuals who reach age 72 after 2022 and age 73 before 2033 can start at age 73. Individuals who reach age 74 after 2032 can start RMDs at age 75.

In addition, the excise tax for delayed or insufficient RMDs is reduced from 50% to 25%.

SECURE 2.0 FAQ | Additional Information, Questions, & Answers

Do you have more information on the Qualified Tax Credits for Employers starting a new plan?

The SECURE 2.0 Act has created new and enhanced tax credits for smaller employers that can make it more affordable for them to start a retirement plan. These tax credits may provide a significant benefit for small businesses that are starting a plan. Learn more here: SECURE 2.0 Tax Credits: An Overview for Employers

When should we expect Plan Amendments for the SECURE 2.0 changes?

Legally Required Plan Amendments must be drafted and executed no later than December 31, 2025 for calendar year end plans. For Plan that span an off-calendar year 12-month period (7/1-6/30 for example) they must draft and execute all required Plan Amendments no later than the end of their 2025 Plan Year, which may be in calendar year 2026.

For Retirement Plan that are terminating on or before December 31, 2025 must have Plan Amendments drafted and executed on or before the Plan Termination Date as all qualified plans that terminate must be in full compliance before they terminate.

Uniglobal clients using the Document Maintenance Program will have Plan Amendments prepared as they are completed. 

Optional Plan Amendments fall under different timing schedules and will be expanded upon shortly.

Our Plan allows for Catch-Up Contributions but not Roth, do we need to add a Roth provision?

Yes, if you wish to retain your participants’ ability to make catch-up contributions after 12/31/2023, a Plan Amendment to add Roth contributions is required.

To request this update, if you have not done so yet, please complete this form: Roth & Catch-Up Contributions Form

Please note your payroll and recordkeeping vendors will need to be notified of any amendment to add Roth so their respective systems can be updated to accommodate Roth contributions.

If you are a Uniglobal client utilizing our Document Maintenance Program, this amendment may be covered at no cost. Please reach out to us or your dedicated Uniglobal representative for more information.

We'd like to convert to a 401(k) Plan in mid-2024, but we just started a SIMPLE IRA in 2023 - do our participants have to wait the full 2 years to roll over their IRA without penalty into our new 401(k) plan?

No, they do not, so long as you (the employer) are converting to a Safe Harbor 401(k) or 403(b) plan.

Our Plan was started in 2023, do we need to add Automatic Enrollment and Automatic Escalation? 

Yes. All new 401(k) and 403(b) plans established after 12/29/2022 will be required to implement Automatic Enrollment beginning in 2025, unless an exception applies.

The initial automatic deferral rate must be at least 3% (but not more than 10%) and must increase by 1% each plan year until reaching at least 10% (but not more than 15%).

Participants may opt out or elect a higher or lower deferral percentage. Additionally, the plan must allow for permissible withdrawals of automatic contributions. Generally, these permissible withdrawals are withdrawals of automatic deferrals within 90 days of automatic enrollment.

Our participants are asking about Employer Roth contributions and Matching on their Student Loan repayments, what is your take on these enhancements?

 While Employer Roth contributions became effective 12/29/2022, Uniglobal recommends delaying implementation of this optional provision to your retirement plan until IRS issues guidance. It is not yet clear how these Employer Roth contributions will be reported (via W-2 or 1099-R) and recordkeeping platform have not yet established practices and procedures necessary to accept Employer Roth contributions.

If your plan participants are eager to convert Employer pre-tax funds to Roth funds, please speak to your Uniglobal representative regarding other options that may be available in lieu of Employer Roth contributions.

Similarly, Uniglobal recommends delaying matching student loan repayments until the IRS provides guidance on procedures that sponsors may use to verify participants’ self-certification of loan repayments.

Additionally, guidance regarding the frequency of student loan match deposits (i.e. can these matching contributions be deposited per payroll period, quarterly, annually) has been requested.

I've heard that we no longer need to send plan notices to eligible participants who do not have an account balance in our plan, is that true?

For Plan Years beginning after December 31, 2022, plan sponsors no longer have to send certain required notices and disclosures to unenrolled, eligible, employees as long as they provide the unenrolled, eligible, employee a Summary Plan Description and other notices upon their initial eligibility. SECURE 2.0 requires retirement plans to send unenrolled, eligible employees an annual reminder notice of their eligibility to participate in the plan and any election deadlines. The notice also needs to detail the key benefits and rights under the plan, with a focus on employer contributions and vesting provisions.

 

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