Broker Check

Secure Act 2.0

Implementation Timeline for Plan Sponsors 

Effective Now/Immediately (12/29/2022)
• New Exclusions to the 10% early withdrawal penalty.
   -   Qualified Disaster
   -   Qualified Birth or Adoption
   -   Terminally Ill
• Employees may self-certify Hardship Distributions.
• Employers may permit Matching Contributions be treated as Roth Contributions

2023 Provisions
• Removal of some notices to unenrolled participants.
• PEPs and MEPs allowed for 403(b) Plans.
• Small Business start-up tax credit increased to 100% costs if <50 employees.
• Small Business tax credit for employer contributions, max of $1,000 per employee for first year and gradually reduces over 5 years. Full credit available for employers with < 50 employees.
• Simple and SEP Roth allowed

2024 Provisions
• Auto-portability of participant accounts to new employer plan.
• Retirement Savings Lost-and-Found Website.
• Employer matching of student loan repayments allowed.
• Catch up contributions must be Roth if participant earning over $145,000
• No RMD’s required for Roth 401(k) or 403(b).
• Automatic force out increased to $7,000
• Emergency linked Savings Account can be mandated by the employer. Cap is $2,500 and is for non HCEs only.
• Starter(k) Plans – For Employers that do not offer a retirement plan
• New Exclusions to 10% early withdrawal penalty
   -   Emergency distribution of $1,000
   -   Domestic Abuse
• Higher Simple IRA contributions for small employers

2025 Provisions
• New 401(k) and 403(b) Plans required to have auto-enroll of at least 3%, auto escalation of 1% per year with cap at 15% and must allow 90 days for participants to un-enroll.
• Part-time employees with 500+ hours for 2 consecutive years eligible to defer.
• Catch up contributions increased for savers between the ages of 60-63.

2026 Provisions
• Annual paper statement requirement.
• New Exclusion to 10% early withdrawal penalty
   -   Qualifying Long-term Care Insurance premiums.

2027 Provisions
• Refundable Savers Credit max of $2,000 for low-income savers. Credit deposited into retirement savings vehicle. H.R.2617 - Consolidated Appropriations Act, 2023 (12/29/2022)
Timeline intended for educational purposes only and includes summary of retirement plan changes signed into law on 12/29/2022.
Not all changes are mandatory, and your retirement plan may differ.
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