User’s guide to SECURE 2.0

A dizzying array of legislation affecting defined contribution (DC) and defined benefit (DB) plans became law on Dec. 29, 2022, as part of a fiscal 2023 government spending package. Capping several years of congressional effort, the SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328) is intended to build on changes made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (Div. O of Pub. L. No. 116-94).

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. The act also includes several apparent drafting errors for which Congress intends to introduce technical corrections legislation. (This guide doesn’t address SECURE 2.0’s employee stock ownership plan (ESOP) provisions and a handful of other nonbenefit-related provisions.) When referring to the original SECURE Act, this guide uses the term “SECURE 1.0" to avoid any confusion between the laws.

This guide will be updated periodically to reflect additional information and guidance. Changes since the original publication date include the following:

Aug. 7

• Employee Plans Compliance Resolution System (EPCRS). The discussion of EPCRS changes reflects IRS Notice 2023-43, which explains the extent to which plan sponsors can use the expanded self-correction program pending official updates.

March 7

• Penalty-free distributions. The discussions of the new distributions from DC plans with no early withdrawal penalty (i.e., for major disasters, personal emergencies, domestic abuse and terminal illness) now indicate whether these distributions satisfy the distributable event rules.
  
  
• Long-term care insurance premiums. The guide includes a new discussion of penalty-free distributions from DC plans to pay for certified long-term care insurance premiums for a participant and the participant’s spouse (or other family members if allowed by regulations).
  
  
• Higher catch-up contribution limits. The discussions of the higher catch-up contribution limit for DC plan and savings incentive match plan for employees of small employers (SIMPLE plan) participants ages 60–63 clarify that, even though plans aren’t required to offer catch-up contributions, those that do apparently must implement the new limit (although IRS guidance is needed).
  
  
• Retroactive plan amendments. The discussion of the extended deadline to adopt plan amendments increasing benefits now clarifies that the later deadline does not apply to amendments increasing matching contributions.
  
  
• Section 420 transfers. The discussion of DB plans’ transfers of excess assets to retiree health accounts now has more detail on the cost-maintenance period for the new de minimis transfers and notes that collectively bargained transfers may not use the new lower threshold.