User's guide to SECURE 2.0
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In This Issue
Legislative and Washington DC Navigating SECURE 2.0 is a formidable challenge. The statute consists of 120 pages of text and 90 individual sections with no table of contents. To help employers and plan sponsors understand the legislation's implications, this guide provides a high-level summary of SECURE 2.0 provisions grouped topically including separate treatment of provisions specific to DC and DB plans. The six tables in this guide describe statutory changes and their effective dates, identify whether the changes are mandatory or optional for employers, and provide initial observations, including implementation challenges for which agency guidance would be helpful. Source: Mercer.com Effective for taxable years after December 31, 2026, the current Saver's Credit will be replaced with the Saver's Match, changing it from a credit paid in cash as part of a tax refund into a federal matching contribution that must be deposited into a taxpayer's IRA or retirement plan. The match program is equal to 50% of IRA or retirement plan contributions up to $2,000 per individual (effectively $1,000 maximum). Source: Schneiderdowns.com Small Businesses and SECURE 2.0: Exemptions and Tax Credits The recently passed retirement reform law will increase the three-year startup tax credit to 100% of administrative costs, up from its current 50%, with an annual maximum of $5,000, for employers with up to 50 employees. Source: Planadviser.com The SECURE Act 2.0: Student Loan Matches This article discusses an optional provision of the SECURE Act 2.0 that is likely to be very popular with some employers, the ability for employers to make matching contributions based on repayment of student loans. It is effective for plan years after December 31, 2023. Since most plans are on calendar years, the provision is effective for them in 2024. Source: Fredreish.com SECURE 2.0 Changes: New Contribution Options This article focuses on three notable changes related to participant options to designate employer contributions as Roth contributions; matching contributions on student loan payments; and establishment of, and contributions to, certain emergency savings accounts. Source: Shermanhoward.com »» Click here for more on Legislative and Washington Actions Fiduciary and Plan Governance ERISA Considerations in Using Brokerage Window Investing The realm of investing employee benefit plan assets through brokerage windows remains largely uncharted territory. Fiduciaries operate under the broad understanding that ERISA Section 404(a) fiduciary duties of prudence and loyalty apply, but with little guidance on how. This 3-page article discusses the state of the law concerning brokerage windows, issues identified by the council's investigation, and ideas for how plan fiduciaries can navigate their duties in implementing or monitoring brokerage windows. Source: Wagnerlawgroup.com Fiduciary Concerns Continue to Stymie Annuities in 401ks Employers have embraced 401k plan benefits changes for 2023, but are still shying away from annuities, according to Alight. Survey data showed that among employers, 47% cite fiduciary concerns as a major reason for not adding annuities. The figure has remained stagnant since the 2018 report, Alight found. Source: Planadviser.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Research Shows Workers' Poor Grasp of Target-Date Funds The MFS Retirement Outlook 2023 survey found gaps between workers' understanding of how target-date funds work and how they function, revealing fundamental misunderstandings that require participant education. These misunderstandings can have implications for saving, investing, and living in retirement, explained Jon Barry, head of client solutions for the investment services group at MFS. Source: Plansponsor.com Passive Mutual Funds Rising, but Won't Overtake Actives due to DC Plan "Stronghold" Passive mutual funds are on the rise as the less-costly investment model continues to see inflows from investors, but defined contribution retirement plans will keep actively managed funds on top into 2027, according to a report and commentary from ISS Market Intelligence. Source: Planadviser.com 401k Participants Rank Crypto Dead Last as Preferred Option A new survey that polled retirement plan sponsors, financial advisors, and plan participants finds little appetite among plan participants to invest their retirement assets in cryptocurrency. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Court and Legal Sports Agency Owner Charged for Allegedly Stealing Retirement Assets The Houston-based sports agent was served a civil suit by the Department of Labor for allegedly dipping into employee retirement savings for company operations. The co-owner of a sports agency has been charged with a civil lawsuit alleging five counts of fiduciary breach including the theft of workers' retirement plan assets. Source: Planadviser.com Can 401k Fee Dispute Cases Survive Based on Bare Allegations Plaintiffs typically allege that plan fiduciaries breached the duties that ERISA imposes on employee retirement plans, namely, that the fiduciaries breached their duties of loyalty and prudence by including subpar investment options in employee 401k plans. These suits are seemingly driven by Monday-morning quarterbacking, where disillusioned plan participants with the benefit of hindsight contend that investment decisions were imprudent. Source: Beneficiallyyours.com Allianz Asset Management of America Dealt Lawsuit Over 401k Plan A pair of Allianz Asset Management of America 401k Savings and Retirement Plan participants have claimed in federal court that plan fiduciaries engaged in self-dealing, according to the complaint. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues State-Based Private-Sector Retirement Programs What's Next with the Evolution of State-Sponsored Retirement Plans? To address the ongoing retirement savings gap, all but three states have initiated or passed legislation to set up a state-sponsored private-sector retirement savings plan, and while early implementation efforts so far have been successful, a new report suggests there's room for improvement. Source: Napa-net.org Compliance and Regulatory Required Minimum Distribution Age to Increase to 75 Effective for distributions made after December 31, 2022, Section 107 of SECURE 2.0 increases the RMD age to 73 for retirees who (a) attain age 72 after December 31, 2022, and (b) attain age 73 before January 1, 2033. It then increases the RMD age to 75 for retirees who attain age 74 after December 31, 2032. Additionally, Congress directed the Internal Revenue Service to update its regulations to eliminate what can amount to a penalty on plan participants with accounts that include annuity contracts. Source: Benefitslawadvisor.com Proposed IRS Regulations Would Make Permanent the Availability of Remote Spousal Consent Elections On December 27, 2022, the IRS issued proposed regulations permitting remote witnessing, in the presence of either a notary public or plan administrator, as an acceptable alternative to the physical presence requirement if certain conditions are satisfied. Source: Wagnerlawgroup.com Regulatory and Statutory Changes Coming to Self-Corrections Programs In recent months, the latitude given to fiduciaries looking to self-correct errors in plan administration has been expanding. The SECURE 2.0 Act of 2022 also made some changes that will ease self-correcting processes. Source: Planadviser.com »» Click here for more Compliance and Regulatory Material Marketplace News iJoin Unveils New Fee Management Solution for 401k Managed Accountss Ubiquity Retirement Announces Partnership With DriveWealth
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