The Consolidated Appropriations Act, 2023 (Public Law No. 117-328) signed into law on 29 December 2022 by President Joe Biden includes the SECURE 2.0 Act of 2022, which introduces over 90 changes to the federal rules governing workplace retirement plans.
This landmark legislation builds on the original SECURE Act that was enacted on 19 December 2019 and aims to expand coverage and increase retirement savings while simplifying and clarifying retirement plan rules. (For prior coverage, see New Opportunities for Workplace Retirement Plans Under the SECURE Act | BDO).
Every employer, whether for-profit or tax-exempt, that currently maintains a qualified retirement plan or is evaluating a future plan should consider implementing these new rules, since the changes are generally beneficial for employees.
Unless the Internal Revenue Service announces otherwise, employers that operate in accordance with the mandatory or optional changes in the law as of the provisions’ applicable effective date have until the end of the plan year beginning in 2025 to adopt the written amendment. Government employers have until the end of their 2027 plan year to amend the plan document.
For more detailed coverage of the changes, see Secure 2.0 Act of 2022 Introduces Key Changes for Workplace Retirement Plans.
While many of the retirement plan provisions in SECURE 2.0 are not effective until later years (including some, like the new federal “Saver’s Match” and mandatory paper benefit statements, that will not take effect until 2026), a number of important provisions require immediate attention. Some of the changes are especially helpful to small employers.
Almost all workplace retirement plans will need to be reviewed for possible amendments and operational changes to reflect SECURE 2.0.
While further guidance on many of the new provisions is needed, employers should review their plan document and operations in the meantime to determine what, if any, amendments will be needed, what operations need to be changed and what systems or processes should be updated.
Employers may want to consult with BDO to address how SECURE 2.0 presents new opportunities and what steps are needed to minimise the impact of unfavourable changes.
Joan Vines
jvines@bdo.com
Norma Sharara
nsharara@bdo.com