Employee benefits and retirement plan solutions Trends and Insights What does the SECURE 2.0 Act of 2022 mean for employers?

What does the SECURE 2.0 Act of 2022 mean for employers?

Find answers to trending questions and answers about the SECURE 2.0 Act of 2022, including required minimum distributions (RMDs), Roth catch-up contributions, hardship self-certification and more.

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For provisions impacting retirement plans in 2024 and beyond, what are the next steps?

Recognize many of the opportunities in the SECURE 2.0 Act are optional. Although these provisions impact plans in 2023 and 2024, the expected date of the legislative amendment will be due by the end of the 2026 plan year, allowing time for careful consideration.

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Here are some top questions and answers for the upcoming retirement plan provisions:




Generally, defined contribution includes 401(k), 403(b), and ESOP.

2024 and beyond




Increase in age for required minimum distributions (RMDs)

The SECURE Act introduced an increase in age for RMDs, and SECURE 2.0 goes further to increase the age to 73 for those turning 72 on or after Jan. 1, 2023 and to age 75 for those turning age 73 on or after Jan. 1, 2033.

Plan types:

  • Defined contribution, 403(b), 457(b), Defined benefit

How do the new RMD rules apply? What if someone turns age 73 in 2023 or 2024?

The applicable RMD age for someone who turned age 73 in 2023 is age 72. The employee will need to begin taking RMDs no later than April 1, 2023 (assuming the employee is an owner or a non-owner and there is no delay for a later termination date).

The applicable RMD age for someone who turns age 73 in 2024 is age 73. The employee must begin taking RMDs no later than April 1, 2025 (assuming the employee is an owner of a non-owner and there is no delay for a later termination date).

Does a plan sponsor need to take action to adopt the change?

This change is a required provision that goes into effect for 2023 RMDs. No plan sponsor action is needed for retirement plans at this time.


Employer matching and non-elective contributions on a Roth basis

Retirement plans may allow participants to elect to receive employer matching and nonelective contributions as Roth contributions.

Plan types:

  • 401(k), 403(b), Governmental 457(b) plans


  • Only applies to vested employees—the person must be vested at the time of contribution.
  • The contributions are not considered wages and not subject to FICA and FUTA (may be some exceptions for governmental plans).
  • Participant must be given a chance to make an election at least once per year.

What are the details around the new Roth provision of the SECURE 2.0 Act that allows participants to elect to receive employer matching and nonelective contributions on a Roth basis?

Roth provision – SECURE 2.0 Act: Plan sponsors may choose to update retirement plan features to allow participants to elect to receive employer matching and nonelective contributions as Roth contributions. Employer matching and nonelective contributions can be treated as Roth contributions. Matching and nonelective contributions designated as Roth contributions are not excludable from income and must be 100% vested when made.

While this provision is available now there are remaining questions, such as the requirement that the contribution be 100% vested, how participants can elect to have their employer contribution made as Roth, and tax-related impacts.

In the meantime, the plan may be able to offer the ability to convert a vested account balance to a Roth money type via an in-plan Roth rollover or conversion. Your plan provider can further discuss this with you to help determine if it’s a plan design feature you would like to move forward with.


Employee self-certification of hardship withdrawals

Plan sponsors may rely on employee certification that deemed hardship withdrawal conditions have been met.

Plan types:

  • 401(k), 403(b), Governmental 457(b) plans, unforeseeable emergency withdrawals

What is a self-certification of hardship withdrawals?

Hardship self-certifications: The participant self-certification provision of the SECURE 2.0 Act states a retirement plan sponsor may rely on an employee’s written self-certification that their distribution meets the requirements of one of the seven safe harbor hardship reasons, and the distribution is not in excess of the amount required to satisfy the financial need and that they do not have alternate means reasonably available to satisfy such need.

Participants will be asked to certify they will preserve their documentation of the hardship and provide such documentation later, if requested. A plan sponsor who elects this method is not required to substantiate the hardship at the time it's taken.

For plans that choose and implement self-certification for hardship withdrawals, participants are able to self-certify through an online experience that follows the rules set forth in SECURE 2.0.

It is possible that during a plan audit, an auditor (RIS/Annual Form 5500) may request a participant produce source documents. The IRS has maintained the plan sponsor is ultimately responsible to track and monitor these documents.

It’s expected the Treasury will provide guidance to address when a plan sponsor has knowledge to the contrary that the employee meets the requirements of a safe harbor hardship. Before a plan sponsor adopts self-certification for hardship withdrawals, they should consider how comfortable they are with not collecting source documents up front from a participant to support the participant's financial hardship.

Note: This differs from the hardship withdrawal summary substantiation method of self-certification the IRS has allowed since 2017, where a participant provides a summary of hardship details and agrees to retain their documentation which substantiates their hardship need and may need to provide this documentation in certain scenarios.

The summary substantiation method may offer retirement plan sponsors more control over the hardship application process where the participant self-certification method of the SECURE 2.0 Act allows participants more latitude to certify their need.


Streamlined rules for withdrawals from retirement funds for disaster relief

Federal disaster withdrawals permitted following federal declaration. Protected Benefit Rules apply to the qualified disaster recovery distribution. (Distributions may be repaid to retirement plan or IRA within three years.)

Plan types:

  • Defined contribution, 403(b), Governmental 457(b) plans, Money Purchase, IRAs (QDRD ONLY)


  • Up to $22,000 may be withdrawn without the 10% early distribution penalty from an employer retirement plan or IRA for individuals affected by a qualified federal disaster.
  • Distributed amounts may be treated as gross income over three years on an individual’s tax return and may be repaid to a retirement plan or IRA within three years.

Who can receive retirement plan withdrawals for disaster relief and what is the timing?

To be eligible for a qualified disaster recovery distribution (QDRD), a participant’s “principal place of abode” must have been in the disaster area during the incident period, and the participant must have sustained an economic loss because of the disaster.

The penalty-free tax treatment applies to distributions for disasters occurring on or after Jan. 26, 2021. The distribution is capped at $22,000 per disaster from retirement savings. Sponsors can offer the relief permanently so it’s automatically available whenever participants are affected by a qualified federally declared disaster.

The distribution must be made no later than 179 days after the disaster applicable date which is the later of:

  1. the first day of the disaster incident period, or
  2. the date of the disaster declaration.

Can retirement plan sponsors provide larger loan amounts if someone is affected by a qualified disaster?

SECURE 2.0 Act allows Defined contribution (including Money Purchase), 403(b) and governmental 457(b) plans to temporarily double the maximum plan loan to the lesser of $100,000 or 100% of the participant’s vested benefit. Plans can also suspend loan repayments for up to one year (with a corresponding extension of the loan term).


Eliminating unnecessary plan requirements for unenrolled participants

Retirement plans are permitted to exclude unenrolled participants from receiving certain required notices and disclosures as long as certain conditions are met.

Plan types:

  • Defined contribution, 403(b) plans

What communications need to be sent to unenrolled participants?

Effective for plan years beginning after Dec. 31, 2022, plan sponsors no longer have to send certain required notices and disclosures to unenrolled participants as long as they provide the unenrolled participant a Summary Plan Description and other notices upon their initial eligibility. SECURE 2.0 requires retirement plans to send unenrolled participants 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.


Long-term, part-time (LTPT) employee deferral qualifications

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Plan types:

  • 401(k) (including governmental and church), 403(b) plans

What is the new 500-hour rule for long-term, part-time employees?

Retirement plan sponsors must now track consecutive years of 500 hours for plans that have an hour requirement for eligibility greater than 500 hours or an eligible employee exclusion based on a service requirement greater than 500 hours of service. With the SECURE Act of 2019, tracking of hours began on or after Jan. 1, 2021, for 401(k) plans with the first potential group of 401(k) LTPT employees generally entering effective Jan. 1, 2024 (in limited instances the service requirement could be met in 2023), with three consecutive years of 500 hours or more. Effective Jan. 1, 2025, under SECURE 2.0, the requirement for 401(k) plans decreases to two consecutive years beginning with computation periods on or after Jan. 1, 2021, of 500 hours or more. Pre-2021 service is disregarded for eligibility and vesting purposes for 401(k) plans.

With SECURE 2.0, tracking of hours began Jan. 1, 2023, for 403(b) plans with the first potential group of 403(b) LTPT employees entering with two consecutive years of 500 hours effective Jan. 1, 2025. Pre-2023 service is disregarded for eligibility and vesting purposes for 403(b) plans.

Plans are required to inform qualifying employees when they become eligible. The legislation only requires entry for deferral purposes. Plans aren’t required to provide matching or other employer contributions and may exclude qualifying employees from testing.

Note: LTPT worker provisions don’t apply to employees subject to a collective bargaining agreement or non-resident aliens who receive no earned income from sources within the United States.

SIMPLE 401(k) plans do not receive testing relief for their LTPT employees and must provide those employees with the nonelective or matching contribution.


Catch-up contributions for higher earners must be made as Roth contributions

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Retirement plans that allow catch-up contributions must support Roth catch-up contributions on or after Jan. 1, 2024 for participants with FICA compensation over $145,000.* The compensation used for determining this dollar threshold are wages for FICA (i.e., Social Security) tax purposes for the preceding calendar year as defined in Code Section 3121(a).

*In response to feedback that the Roth catch-up rule will be difficult to implement when it takes effect in 2024, the IRS has provided for a two-year administrative transition period. As a result, during the 2024 and 2025 tax year, catch-up contributions made by individuals who will be turning 50+ years and with FICA wages in excess of $145,000 can continue to be made as they are today. This gives plan sponsors until Jan. 1, 2026, to take the necessary steps to implement the processes needed to accommodate Roth contributions.

Plan types:

  • Defined contribution, Governmental 457(b) (SIMPLE plans exempted)


  • For plans with a non-calendar plan year, you need to track this compensation by calendar year beginning Jan. 1, 2026, not plan year.

Does a plan sponsor need to take action to adopt the change?

For retirement plans offering pre-tax catch-up contributions but not Roth deferrals, the SECURE Act requires a change. A plan amendment will be needed to either:

  • Add Roth deferrals as a contribution type; or
  • Remove catch-up contributions completely from the plan.

It will be necessary to work with the plan’s payroll provider to ensure they can accommodate pre-tax AND Roth catch-up contributions.

For retirement plan sponsors that don’t make a decision to add Roth or remove catch-up contributions by Jan. 1, 2026, an operational failure may be created if a catch-up contribution is made pre-tax for a participant over the FICA compensation of $145,000.

Note: When amending plans for this provision, fees may apply.

What impact does this have on payroll submissions for retirement plans with Roth contributions?

This is the first time FICA wages have been brought into threshold conversations in retirement plans (vs. other types of compensation). Plan sponsors and/or their payroll providers will need to determine and report employees that exceed $145,000 in FICA wages each year. Payroll file feeds to the record keeper will also need to appropriately account for Roth catch-up contributions. It is important plan sponsors discuss changes with their payroll provider to prepare for the new requirement.


Auto-enrollment requirement for start-up retirement plans (as an Eligible Automatic Contribution Arrangement or EACA)

The EACA plan feature must offer a 90-day permissible withdrawal option and must use a qualified default investment alternative (QDIA).

Plan types:

  • 401(k), 403(b) plans

Are all retirement plans required to have auto-enrollment or is it only required for new plans?

Starting with plan years beginning on or after Jan. 1, 2025, SECURE 2.0 requires automatic enrollment features for newly established 401(k) and 403(b) plans with some exceptions. Newly established plans are those established on or after Dec. 29, 2022.

EACA auto-design features should be added before the first day of the plan year. If the plan needs additional updates, plan sponsors are encouraged to add this provision sooner than later to minimize the impact of multiple updates.

This also applies to employers joining a multiple employer plan (MEP) or pooled employer plan (PEP) on or after Dec. 29, 2022. Based on guidance provided in Notice 2024-02:

  • If a grandfathered outside plan joins a grandfathered PEP as a participating employer or joins a grandfathered plan of an existing participating employer in a grandfathered PEP, the ongoing plan in the PEP remains grandfathered.
  • In all other situations--a non-grandfathered plan joins a grandfathered PEP or grandfathered plan joins a non-grandfathered PEP--either as a participating employer or of an existing participating employer, the ongoing plan in the PEP will be a non-grandfathered plan. This does no impact the rest of the PEP.

What are the required auto-enrollment and auto-contribution increase rates?

The default contribution rate during the first year must be at least 3%, but not more than 10%, plus an automatic contribution increase of 1% per year thereafter up to a maximum of at least 10%, but not more than 15%. Participants have the option to elect to opt out of these provisions.

Note: Plan sponsors involved in mergers and acquisitions will want to carefully consider all options if the transaction involves 401(k) and 403(b) plans established prior to Dec. 29, 2022. They may not want to terminate those plans and establish new ones that will be subject to the new automatic enrollment rules, especially if they don’t want the automatic enrollment rules to apply.


Threshold for small amount force-out distribution (SAFO) increasing

SECURE 2.0 updated the maximum dollar threshold for small amount force-out (SAFO) distributions from $5,000 to $7,000.

Plan types:

  • Defined contribution, Defined benefit

What does that mean for former employees in a retirement plan?

After Jan. 1, 2024, SAFO distributions will continue to be made but with the appropriate limit defined by the plan document.

Plan sponsors using a standard plan document from any provider with a $5,000 SAFO limit will likely automatically have the SAFO threshold increased to $7,000.


Matching student loan debt repayment

Employers may treat qualified student loan payments (QSLPs) made by an employee in repayment of a qualified education loan as if they’re elective deferrals for the purpose of making matching contributions.

Plan types:

  • Defined contribution, Governmental 457(b) plans, Simple IRAs

Are plan sponsors responsible for monitoring matching student loan payments?

Plan sponsors may rely on self-certification that an employee made qualified student loan repayments during the plan year. The self-certification may be done on an annual basis. Self-certification relieves the burden of the employer to require proof from the employee.

The employee is responsible for certifying annually to the employer that such loan payments are qualified. Employees have 90 days to certify after plan year-end.

How will the student loan matching contributions be handled for the QSLP?

Plans may test employees receiving student loan matches separately for the actual deferral percentage (ADP) test. Testing cannot proceed until student loan certification is completed.

Matching contributions must be made at the same rate as regular contributions and only to employees otherwise eligible for matching contributions.

Contributions are limited to the 402(g) limit, reduced by any elective deferrals made by the employee for such year.

Further guidance and clarification on several functional details are still needed.


  • Currently, the IRS has not provided relief to the 2½ month deadline for refunds for plans electing to provide QSLP match. Standard fines and penalties may apply.

Emergency expense withdrawals

An individual may take an emergency expense withdrawal from their retirement account in an amount that is the lesser of (i) $1,000, or (ii) the excess of the individual’s vested account balance in the Plan over $1,000.

Plan types:

  • Defined contribution, Governmental 457(b) plans, IRAs

What is an emergency withdrawal and what is the plan sponsor’s responsibility?

Plans may allow participants to withdraw up to $1,000 in a year from their retirement account to pay for emergency expenses.

The plan sponsor may rely on participant self-certification that the participant is using the money for an unforeseeable or immediate financial need related to a necessary personal or family emergency.

An individual may only take one emergency expense withdrawal in any calendar year. Following an emergency withdrawal, participants may not apply for a subsequent, annual withdrawal within the next three calendar years unless:

  • The previous withdrawal is fully repaid to the retirement plan.
  • The subsequent, aggregate employee contributions to the retirement plan equal or exceed the prior distribution.

A qualifying emergency expense withdrawal is exempt from the 10% additional income tax on early withdrawals from a retirement plan.

Protected benefit rules apply to the emergency expense withdrawal


Domestic abuse withdrawals

Plan types:

  • Defined contribution, Governmental 457(b) plans, IRAs

What should I know about the domestic abuse withdrawals provision and how does it work?

Plans may allow participants who self-certify that they experienced domestic abuse to withdraw up to the lesser of $10,000 or 50% of their vested retirement account. Such withdrawal may be made during a one-year period beginning on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner.

Further clarification is needed on how to treat the $10,000 limit.

Participants may repay the withdrawal over 3 years and the participant can recover applicable income taxes paid on their individual tax filing.

A qualifying domestic abuse expense withdrawal is exempt from the 10% additional income tax on early withdrawals from a retirement plan.

Protected benefit rules apply to domestic abuse withdrawal.

Note: The term “domestic abuse” means physical, psychological, sexual, emotional, or economic abuse, including efforts to control, isolate, humiliate, intimidate the victim, or to undermine the victim’s ability to reason independently, including by means of abuse of the victim’s child or another family member living in the household.


Small medium business (SMB) tax credits

New startup tax credits are available to help small businesses establish retirement plans.

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