As we approach the end of 2024, it’s a great opportunity to review some important SECURE 2.0 Act provisions that could affect your retirement plans. Staying on top of these updates ensures we’re prepared for upcoming changes and enables us to serve you and your participants effectively. Here’s a summary of this year’s highlights and a look at what’s next.
SECURE 2.0 Act Provisions: A Quick Recap
- Expanded Eligibility for Long-Term Part-Time Employees
Eligibility for both 401(k) and 403(b) plans has now extended to include long-term, part-time (LTPT) employees. For those using the “hours” method, it’s a good time to ensure qualified LTPT employees have been notified about their eligibility (and automatic enrollment, if applicable). - Eligible Automatic Contribution Arrangement (EACA) for New Plans
Plans created after December 29, 2022, will need to incorporate an EACA by January 1, 2025. Your Plan administrator sent notifications over the summer to keep you on track for compliance with this requirement, if applicable. - Increased Catch-Up Limits for Participants Ages 60-63
Starting January 1, 2025, plans offering catch-up contributions can include higher limits for participants between the ages of 60 and 63, which provides an excellent opportunity to boost retirement savings for participants nearing retirement age. - Roth Treatment for Employer Matching Contributions
Plans now have the option to allow Roth treatment for employer matching and nonelective contributions. If you’re interested in considering this feature, please reach out to discuss it further.
Looking Ahead: SECURE 2.0 Timeline Updates
- Roth Catch-Up Contributions for Higher-Income Participants
The IRS has provided a two-year window for implementing Roth catch-up contributions for participants with FICA compensation over $145,000, giving plans until January 1, 2026, for compliance. - Addressing Overpayments
Enhanced protections now enable plan fiduciaries to manage overpayments in defined benefit and contribution plans. Additional guidance will be available in early 2025 as new procedures roll out. - Retirement Savings Lost and Found (RSLF)
By the end of 2024, the Department of Labor will launch the RSLF database, designed to help participants locate plan administrators for both defined contribution and defined benefit plans. This initiative is essential for participants to stay connected to their retirement savings.
Staying Up to Date
We’ll continue to keep you informed on SECURE 2.0 developments as relevant changes roll out through 2028. Please reach out if you have any questions; our partnership is key to navigating these changes effectively.
Adapted from a Principal Financial Services email update. © 2024 Principal Financial Services, Inc., 711 High Street, Des Moines, Iowa 50392.