Keeping you informed on the SECURE 2.0 Act

Due to the mandatory provision requiring catch-up contributions for participants with FICA compensation over $150,000 in 2025 (HIE) to be made as Roth contributions, we have communicated processes (PDF) and a correction policy (PDF) to help implement these changes.

To help ensure this provision is applied correctly, it’s essential that plan sponsors report HIE indicators in a timely manner. If you have an opportunity, please encourage them to do so. You may also submit catch-up eligible HIEs on their behalf by uploading a file directly to principal.com using the Plans tab, then choosing Import a file.

If corrections are needed because HIEs were reported late and catch-up contributions were not properly made as Roth contributions, fees may apply. Please keep in mind, not identifying HIEs can result in an operational plan failure.

Effective Jan. 1, 2026, new regulations require participants to receive paper statements as follows:

• Defined contribution (DC) plan participants: Annually
• Defined benefit (DB) plan participants: Every three years

Rest assured, we’re putting processes and procedures in place to comply, and are taking recently proposed DOL eDelivery guidance into account. There are exceptions to the paper statement requirement if the participant consented to electronic delivery, or if a work email address is on file and the participant is expected to read work email as an integral part of their job.

Start-up plans and plans newly adopting elective deferral contributions on or after Dec. 29, 2022, must include an Eligible Automatic Contribution Arrangement (EACA) with some exceptions. We contacted you if you had clients with all the requirements to help ensure we were following your desired direction regarding automatic enrollment rate for rehired participants.

• Roth employer matching and nonelective contributions - Legislation allows participants to elect to receive employer matching and nonelective contributions as Roth contributions. We’re monitoring interest and reviewing service solutions, with the goal of accommodating this provision in 2026.
• Qualified long-term care distributions - Effective Jan. 1, 2026, certain plans may offer an optional withdrawal provision that allows participants to pay for certified long-term care insurance premiums once per year without incurring the early penalty tax. Withdrawal amounts are limited to the lesser of the premium, 10% of vested benefit or $2600 (indexed). Participants cannot self-certify and must provide the plan sponsor with a premium statement to proceed.

• The Department of Labor’s (DOL) new Retirement Savings Lost and Found (RSLF) database for DC and DB plans is operational with voluntary participation. We continue to monitor developments.
• The IRS saver’s credit will no longer be refunded to individuals in cash after Dec. 31, 2026. Instead, the Saver’s Match will replace the current Saver’s Credit and provide a federal contribution equal to 50% of up to $2,000 in qualified retirement contributions. The match is deposited directly into the participant’s retirement account, with eligibility based on income. We’re monitoring federal guidance to understand the operational and administrative requirements for plan sponsors and participants. Participation appears voluntary at this time.
• Collective investment trusts (CITs) are permitted to be offered within 403(b) plans; however, additional regulatory updates are required before these investment vehicles can be implemented. We’ll share updates as guidance becomes available.

We’ll share this update with your clients in the Plan Sponsor Newsletter. We’ll encourage them to speak with you to discuss the provisions and let them know we’ll work directly with you on any changes needed. We’re available and ready to help with any questions regarding our processes and procedures to comply with the regulations.

We wanted to ensure you knew about this communication in case your clients come to you with questions. We understand these provisions are complex and remain committed to working with you to get you and your clients ready and feel confident.