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).

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.

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.

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.

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, from a payroll perspective and knowing more guidance/correction of technical error is needed, plan sponsors may want to delay adding this feature until additional guidance is provided.

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.

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.

Hardship self-certifications: The participant self-certification provision of SECURE 2.0 states a plan sponsor may relay 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.

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.

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 from retirement savings. Sponsors can offer the relief permanently so it’s automatically available whenever participants are affected by a qualified federally declared disaster.

SECURE 2.0 Act allows 401(k), 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).

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.