You’ve read the headlines about the new SECURE Act 2.0 and the myriad upcoming changes for 401(k) plans and 403(b) plans, as well as 457(b) plans. Here’s an action list on what you can do now to get ready for the changes—both the mandatory changes you’ll need to implement and the optional plan enhancements that you’ll want to consider.
If you haven’t already, get a deeper grounding on the SECURE Act 2.0 changes by participating in a webinar (watch our recent briefing below) or read a detailed SECURE Act 2.0 summary geared for retirement plan sponsors.
Develop a Timeline
Use the deeper dive review as an opportunity to develop a timeline and prioritize those changes that are happening soon and those that are delayed for a few years. Several of the optional plan enhancements are available now—subject to your plan provider’s ability to implement them—and one significant change is effective in 2024, the “Rothification” of age 50 catch-up contributions for highly compensated employees.
Talk to Your Plan Provider
Schedule a call with your plan provider (including recordkeeper and/or third-party administrator) to hear their roll out of SECURE Act 2.0 changes. They can assure you of their readiness for the mandatory changes, such as the new age 73 minimum distribution age and the upcoming Rothification of age 50 catch-up contributions for highly compensated employees. They can also advise on expected timing of their operationalization of the various optional plan features, such as matching student loan payments, the new side-car emergency savings accounts, and the expanded in-service withdrawal options.
Discuss Optional Changes Internally
It’s not too early to schedule a discussion with your internal HR and Finance leads about the various optional plan changes to identify which ones may be of interest to your organization. Some optional changes may present additional plan expenses or payroll and HRIS system updates. You can start budgeting and planning for those changes now.
Anticipate Payroll Programming Needs
A few changes will likely require updates to your payroll or HRIS systems. Examples may include (1) programming for new types of Roth contributions, or (2) tracking plan eligibility for long-term part-time employees. Your plan provider may also have insights on upcoming system updates, both on their system interfaces and on the payroll feeds you manage.
Note the Plan Amendment Date
This new legislation will require amendments to your retirement plan. For many plans, the plan amendments won’t be due until the end of the 2025 plan year—and that deadline may be further extended. So, it’s not urgent, but this is a good opportunity to confirm you have a plan document provider that is actively updating your plan document as needed. As provider relationships change, plan document updates can sometimes slip through the cracks. While plan amendments are not immediately needed, communication of the new features to participants is necessary. Work with your legal counsel and your recordkeeper and/or communication team to develop a robust communication campaign.
Get Help on New Issues
Undoubtedly, the SECURE Act 2.0 will present novel questions about your retirement plan. Make sure you are getting professional guidance where needed from your recordkeeper, plan advisor, and outside legal counsel. For example, we’re getting questions about the expanded plan eligibility for long-term part-time employees, such as reviewing current plan eligibility rules and tracking service for some more challenging employee groups (e.g., part-time salaried employees, per diem healthcare workers, student employees, and adjunct faculty). Many questions may also be answered in upcoming IRS guidance.
Stay Tuned for Updates
The alerts you’re reading today will not be the last word on the Act. Many of the key changes are subject to future regulations, which will refine or expand the requirements and may also extend compliance deadlines. Keep an eye open for updates from the Nixon Peabody Benefits team.