Hello NAGDCA Members,
As is the case for many of you, we have had a busy start to the year. After SECURE 2.0 passed at the end of 2022, we assumed we would be able to move on to focus on other important industry topics. Not so much!
So far this year we have held three SECURE webinars (with more on the way), built a new SECURE resource page with an ever-growing list of FAQs, sent a letter to the IRS to ask them to fix a drafting error on Section 603, and we will finalize another letter to them later this week asking for clarifications and technical corrections on several sections of the bill. It has been a flurry of activity with the intent of trying to help make clear what you must do, what you can do, and how to do it. If you have questions about SECURE, please explore those resources. If you cannot find the answer to your questions, let us know and we will find an answer for you.
The most pressing issue for many of you has been the provision related to catch-up contributions (Section 603). As Diana mentions in her letter, we are working with alacrity to get guidance and relief from what appears to be an untenable situation. We have asked for clarity on how to verify income levels, but more importantly we hope to get a longer timeline for you to implement the new law. We know many of you have plans driven by statute that will not be able to add a Roth feature and implement new payroll processes by the end of the year. We also know that many multiemployer state plans need much more time than nine months to get the processes in place to comply with this section of the law. Our hope is that regulators will allow you extra time as long as you make a good-faith effort to get into compliance.
We will do everything we can to get resolution on this, and other, issues as quickly as possible. The Executive Board is headed to Capitol Hill in May to meet with Congressional and regulatory leaders, and we hope to have their decisions on our requests soon after those meetings so you can move forward with some assurance on what you need to do. Our worst outcome would be plans eliminating catch-up contributions in 2024 because you can’t comply with the law, and we will do everything we can to prevent that from happening. Stay tuned for much more information on this in the coming months.
In the meantime, if we can provide any further resources to you on SECURE or anything else, please let us know right away. We are here to help, and we appreciate your membership.
All the Best,
By Diana McDonald, Groom Law Group
With SECURE 2.0 across the finish line, attention now turns to technical corrections to tidy up errors in the bill and to regulations to effectuate the bill’s provisions. With a divided Congress, Congressional staff see the best opportunity to pass a technical corrections package in a fiscal year 2024 omnibus spending bill, if one comes together later this year. The federal fiscal year ends each year on September 30, but Congress often has to pass stop-gap continuing resolution spending bills as it works to reach a deal.
Because a legislative fix for SECURE 2.0 errors may be some months away, NAGDCA is turning to the Treasury and IRS to issue agency guidance addressing pressing matters. In a February letter, NAGDCA noted that a drafting error that some have feared may have accidentally disallowed all catch-up contributions is an issue of particular concern for governmental plans. NAGDCA further reminded Treasury and IRS of past instances where they have issued guidance pending an eventual legislative fix. In recent weeks, awareness of the topic has reached the highest levels of government: House Ways and Means Committee Ranking Member Richard Neal (D-MA) recently told Tax Notes that he spoke with Treasury Secretary Janet Yellen regarding the catch-up contributions issue. According to Rep. Neal, Secretary Yellen said she intends to have her agency address the issue administratively through guidance, which would be a huge win for NAGDCA.
NAGDCA is working on a second letter to Treasury and IRS addressing additional SECURE 2.0 items relevant to our members. Topics to be addressed in this second letter include concerns with the requirement that age 50 catch-up contributions be made on a Roth after-tax basis starting in 2024, implementation of changes to the required minimum distribution rules, clarification of the SECURE 1.0 and SECURE 2.0 long-term, part-time worker provisions, and the agencies’ interpretation of the impact of ERISA cross-references to governmental plans.
We expect NAGDCA’s letters to meaningfully affect policy changes. Please contact Matt Petersen if you have any concerns with SECURE 2.0 implementation not identified above.
2023 INDUSTRY ROUNDTABLE
Don’t miss the 2023 Industry Roundtable in Washington, DC. The event offers a unique opportunity to meet and discuss important legislative, administrative, and strategic issues facing public sector DC plans. The meeting is exclusively for industry representatives and is designed to address concerns specific to their needs.
Click here to view the agenda and learn more about the event.
Click here to register today!
AWARD NOMINATIONS DUE APRIL 28
We need your help identifying NAGDCA members who have done incredible work over the past year to create secure retirement futures for their public sector employees.
Plans of all types and sizes are encouraged to submit nominations. Asset size and plan resources will be taken into consideration during the scoring process. Industry partners may nominate clients or plans may self-nominate. The winners are announced in August and will be recognized at NAGDCA’s Annual Conference in October.
Click here to learn more.
SAVE THE DATE FOR #NAGDCA23
The NAGDCA Annual Conference is the can’t-miss event for the public sector defined contribution retirement plan industry. The conference is an opportunity for you to build a national network of plan sponsors and industry representatives, share ideas with peers, learn innovative techniques for improving retirement outcomes, and much more.
Mark your calendar today, and keep an eye out for registration to open in early May!