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On December 20, the Treasury Department issued a “grab bag” of guidance on the new retirement savings rules and opportunities in the SECURE 2.0 retirement savings law enacted late in 2022. Notice 2024-02 covers a dozen of the law’s provisions, in a question-and-answer format.

 Among the areas of guidance are:

  1. Mandatory automatic enrollment (these provisions take effect for plan years beginning after 12/31/24);
  2. Distributions not subject to early withdrawal penalty tax due to terminal illness (effective for distributions made after 12/29/22); 
  3. Rules regarding corrections regarding missed deferrals (effective 12/31/23);
  4. Employer-made Roth contributions (contributions made after 12/29/22);
  5. De minimis incentives for contributions to 401(k)/403(b) plans (12/29/22);
  6. Cash balance plans (plan years starting after 12/29/22);
  7. Plan amendments (generally a one-year extension covering changes back to 2020);
  8. Small employer start-up Plan Credit (effective in 2023);
  9. SIMPLE Plan contribution limit increase (starting after 12/31/23);
  10. Small employer military spouse credit (starting in 2023);
  11. Instructions on replacing a SIMPLE IRA with a safe harbor 401(k) plan (effective for plan years after 12/31/23); and
  12. Expansion of SIMPLE and SEP Roth IRAs (after 12/31/22).

On automatic enrollment (section 101 of SECURE 2.0), the guidance provides clarity on how to deal with plans not subject to SECURE 2.0’s automatic enrollment mandate, as compared to post-SECURE 2.0 plans that are subject to the law’s automatic enrollment mandate. Section 102 provides clarification on which employers are eligible for the new retirement plan start-up tax credit. The guidance specifies that the section 113 rule that allows de minimums incentives to encourage workers to participate in a plan allows incentives valued at $250 or less. The section 117 contribution limit for SIMPLE plans is clarified by a rule that specifies that an eligible employer may not have offered a retirement plan in the three preceding years. It also provides clarification on other eligibility requirements. Additional clarifications related to plan corrections and amendments are also included in the “grab bag” Notice 2024-02 guidance.

Prospects: SECURE 2.0 is an extensive retirement savings law and more guidance on its implementation is expected this year.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.