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IRS Issues Two Pieces of Guidance Related to SECURE 2.0

SECURE 2.0 Act of 2022 Grab Bag Guidance

January 8, 2024

On December 20, the U.S. Treasury Department and Internal Revenue Service (IRS) issued two pieces of guidance clarifying various provisions of the SECURE 2.0 Act of 2022, the comprehensive retirement policy legislation that included provisions supported and advocated by MissionSquare. The long-awaited “grab bag” of guidance for SECURE 2.0 in Notice 2024-2, establishes a cursory framework for employers to implement certain, but not all, provisions of the significant retirement access law signed into law late last year. The Notice addressed a dozen issues in a question-and-answer format, under numerous sections of SECURE 2.0:

  • Expanding automatic enrollment in retirement plans (Section 101)
  • Start-up credit enhancement (Section 102)
  • Military spouse retirement plan eligibility credit for small employers (Section 112)
  • Small immediate financial incentives for contributing to a plan (Section 113)
  • Contribution limit for SIMPLE plans (Section 117)
  • Exception to the additional tax for terminally ill individuals (Section 326)
  • Mid-year termination of and rollovers from SIMPLE IRAs (Section 332)
  • Cash balance plan projections (Section 348)
  • Safe harbor for correcting elective deferral failures (Section 350)
  • Plan amendment deadlines and anti-cutback relief (Section 501)
  • SIMPLE and SEP Roth IRAs (Section 601)
  • Optional treatment of employer contributions or nonelective contributions as Roth contributions (Section 604)

Since the law’s enactment MissionSquare has pursued with Treasury and Congress a smooth implementation of other SECURE 2.0 Act requirements related to governmental plans alongside our partners at NAGDCA and SPARK. Though the guidance did not address some urgent issues like the student loan match, the Saver’s Match, and emergency savings provisions, the Notice acknowledged that there will likely be further guidance and additional regulations.

For a more in-depth review of the IRS SECURE 2.0 guidance, please join MissionSquare Retirement’s SECURE 2.0 webinar, February 22, 2024. Comments are due for the provisions in the Notice by February 20, 2024 to the IRS.

IRS Cumulative List of Changes in Plan Qualification Requirements for Defined Contribution Qualified Pre-approved Plans

The IRS issued Notice 2024-3, the 2023 Cumulative List for changes to pre-approved DC plans. This list are the changes required for a plan to remain a safe harbor, pre-approved plan.

The 2023 Cumulative List includes, for example, changes made by the original Setting Every Community Up for Retirement Enhancement (SECURE) Act, SECURE 2.0, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Miner’s Act, the Bipartisan Budget Act of 2018 and other recent regulatory changes from Treasury and IRS. The submission period begins on February 1, 2024, and ends on January 31, 2025. For MissionSquare clients who have adopted a MissionSquare 401(a) or 457(b) model plan, MissionSquare will be restating these model plans in accordance with the requirements and submitting them for an IRS approval letter.

Many, but not all, of the changes made by SECURE 2.0 are on the 2023 Cumulative List. For example, the 2023 Cumulative List does not include SECURE 2.0’s relief for student loan matching contributions, pension linked emergency savings accounts, or the new lifetime RMD exclusion for in-plan Roth accounts. In this regard, Notice 2024-3 instructs document providers, such as MissionSquare, not to submit documents reflecting the SECURE 2.0 provisions that are not on the 2023 Cumulative List. However, Notice 2024-3 cautions providers that they must nevertheless timely adopt SECURE 2.0 amendments in accordance with the extended amendment deadlines set forth in Notice 2024-2, or, if later for discretionary amendments, the deadline set forth in Revenue Procedure 2023-37.

For more information on SECURE 2.0 or other retirement policy issues, contact Erica McFarquhar, Deputy General Counsel, or Irica Solomon, Head of Government Affairs.

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