SECURE 2.0 Mandatory Provisions:
Further IRS guidance may be needed on some of the items listed below before they can be implemented.
Increase in Age for Required Minimum Distributions (SECURE 2.0 Sec. 107)
Effective 1/1/2023, this provision increases the required minimum distribution from age 72 to 73, effective January 1, 2023, and then from age 73 to age 75 effective January 1, 2033.
Repayment of Qualified Birth or Adoption Distribution (QBAD) Limited to 3 years (SECURE 2.0 Sec. 311)
Effective 1/1/2022, this provision restricts the QBAD recontribution period to 3 years. A participant who received a QBAD on or before December 29, 2022, may, at any time after such distribution and before January 1, 2026, make one or more recontributions.
Roth Plan Distribution Rules – (Excludes Roth (including in Plan Roth Conversions)
in the calculation and payment of RMDs during the life of the participant) SECURE 2.0 Sec. 325)
Effective 1/1/2024, this provision eliminates “pre-death” required minimum distributions (RMDs) from designated Roth accounts held in in retirement plans. This effectively treats designated Roth accounts the same as Roth IRAs. Participants may still choose to take payments from their designated Roth accounts. Participants enrolled in automated/systematic withdrawals will need to stop, and then restart their 2024 payments if their account holds designated Roth amounts and they don’t want lower payments. For anyone born before 1951, whose required beginning date is 4/1/2024, because they terminated employment in 2023, their 2023 RMD is not affected.
Age 50 Catch-up Contributions must be made on a Roth Basis for High Earners (SECURE 2.0 Sec. 603)
Effective 1/1/2026 (This provision was originally effective 1/1/2024 however an additional 2 year transition period was added), this provision requires that all catch-up contributions made on behalf of high earners must be made as Roth deferral contributions. High earners are employees with FICA wages of more than $145,000 (indexed starting in 2026).
Small Immediate Financial Incentives for contributing to a Plan (SECURE 2.0 Sec. 113)
Effective 1/1/2023, this provision enables employers to provide employees with de minimis financial incentives (such as low-dollar gift cards that are $25 dollars or less) to encourage them to make elective deferrals into a plan. The employer may not pay for such de minimis financial incentives with plan assets.
Recovery of Retirement Plan Overpayments (SECURE 2.0 Sec. 301)
Effective 1/1/2022, this provision allows retirement plan fiduciaries the ability to decide whether to recoup overpayments that were mistakenly made to retirees. If plan fiduciaries choose to recoup overpayments, limitations and protections apply to safeguard innocent retirees. Rollovers of the overpayments also remain valid. This provision further outlines how plan fiduciaries may proceed with respect to determinations made prior to December 29, 2022, to seek or not to seek recovery of overpayments.
Eliminating Unnecessary Plan Requirements related to Unenrolled participants (SECURE 2.0 Sec. 320)
Effective 1/1/2023, this provision eliminates the requirement that employers provide certain intermittent ERISA or Code notices to unenrolled participants who have not elected to participate in a workplace retirement plan. The plan is required to send: (1) an annual reminder notice of the participant’s eligibility to participate in the plan and any applicable election deadlines; and (2) any other required document requested at any time by the participant.