On December 23, Congress passed the Consolidated Appropriations Act of 2023 to fund the government through September 30, 2023. Division T of the legislation is the SECURE 2.0 Act of 2022 (“SECURE 2.0”), which builds upon 2019’s Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act,” H.R. 1994, Groom summary).

SECURE 2.0 contains 90 provisions aimed at modernizing the retirement system, encouraging additional retirement savings, and easing administrative requirements. The changes will have at least some impact on most plans, so plan sponsors may need to take proactive steps in the near future. Fortunately, only a few of SECURE 2.0’s provisions take effect before 2024.

Two of NAGDCA’s priorities – eliminating the “first day of the month rule” for 457 plans and exempting designated Roth contributions from the lifetime required minimum distribution rules – were included in the final legislation. Unfortunately, a provision to allow 403(b) plans to invest in collective investment trusts encountered last minute headwinds and was not included.

SECURE 2.0’s other notable provisions include:

  • Increasing the required minimum distribution age from 72 to 75;
  • Changing the amount and tax treatment of catch-up contributions;
  • Permitting new plan design features, including certain student loan matching programs and in-plan emergency savings accounts;
  • Addressing plan leakage by permitting “automatic portability” and creating a federal “Lost and Found” database;
  • Requiring certain new 401(k) and 403(b) plans to include automatic enrollment and automatic escalation features; and
  • Modifying the Saver’s Credit to make it refundable and pay it as a direct contribution to the individual’s retirement savings account rather than as a tax refund, among other provisions.

Click here to download a chart summarizing all of SECURE 2.0’s provisions along with their effective dates. To learn more about the bill’s impact on government plan sponsors, NAGDCA will host a webinar on Tuesday, January 10 – click here to register.

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