Things I Worry About (4): Automatic Enrollment (4)
Key Takeaways The SECURE Act 2.0 required that “new” 401(k) and private sector 403(b) plans automatically enroll their eligible employees, but not until plan years beginning after December 31, 2024…just weeks from now. “New” plans include most that were established on or after the enactment date of SECURE 2.0—December 29, 2022. Unfortunately, it is likely […]
The SECURE Act 2.0: The Most Impactful Provisions #8 — Financial Incentives for Participants for Deferrals
Key Takeaways Prior to the SECURE Act 2.0 the only financial incentive for a participant to make a deferral was a matching contribution. However, the new law permits “de minimus” non-cash incentives for beginning participation or increasing deferrals, so long as the incentives are not paid for by the plan. This change will allow plan […]
The SECURE Act 2.0: The Most Impactful Provisions (#5-Catch-up Contributions for Higher Compensated Must be Roth Contributions)
Key Takeaways The SECURE Act 2.0 requires that catch-up contributions for higher compensated participants be treated as Roth deferrals. This provision is effective for tax years beginning after December 31, 2023 (that is, in 2024 for calendar year taxpayers). Unfortunately, due to a drafting error in the legislation, the provision in the Code that permits […]
The SECURE Act 2.0: The Most Impactful Provisions (#1–Automatic Plans)
Key Takeaways “New” 401(k) and 403(b) plans must be automatically enrolled, with automatic deferral increases, no later than the plan year beginning after December 31, 2024 (e.g., 2025 for calendar year plans). Any plan “established” on or after December 29, 2022 is considered a new plan. Defaulting participants must be invested in a QDIA. There […]