On Dec. 20, 2023, the IRS issued Notice 2024-2, providing guidance in the form of questions and answers with respect to various provisions of the legislation known as the “SECURE 2.0” Act.
- Background – The Consolidated Appropriations Act of 2023 was signed on Dec. 29, 2022, which is an omnibus bill that includes the SECURE 2.0 legislation, referred to as such because it builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The legislation is intended to increase employees’ retirement savings and makes numerous important changes that employers should be aware of. A section-by-section summary of the legislation can be found here.
- Plan Amendments – Under Section 501 of SECURE 2.0, the plan amendment deadline for SECURE Act and SECURE 2.0 Act provisions is the last day of the first plan year beginning or after Jan. 1, 2025 (or Jan. 1, 2027, in the case of certain collectively bargained or governmental plans). The new guidance extends the plan amendment deadlines under Section 501.
- Section Summary – 2024-2 addresses a variety of issues including:
- Section 101 (expanding automatic enrollment in retirement plans)
- Section 332 (employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year)
- Section 350 (safe harbor for correction of employee elective deferral failures)
- Section 604 (optional treatment of employer contributions or nonelective contributions as Roth contributions)
The Treasury Department and the IRS invite comments and suggestions on the guidance, which should be submitted on or before Feb. 20, 2024. We will continue to monitor and communicate Secure 2.0’s status and changes.
Contact us with any questions.