The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act of 2022 brings considerable alterations to the legal and compliance environment for U.S. retirement plans. Foley & Lardner LLP is producing a sequence of articles that probe extensively into the crucial SECURE 2.0 provisions that will impact how companies arrange and manage their 401(k) plans, pension plans, and other types of employer-backed retirement schemes.
One of the primary features of SECURE 2.0 is the introduction of a Department of Labor (DOL) “Lost and Found” for retirement accounts. In an attempt to consolidate and streamline the search process for lost or unaccounted-for retirement benefits, the DOL will establish a national registry to help link retirement accounts with their rightful owners. This new framework is aimed at resolving the long-standing issue of lost retirement assets, ensuring employees across the U.S. have better access to their retirement benefits.
In addition to the DOL “Lost and Found”, there are noteworthy updates to the Employee Plans Compliance Resolution System (EPCRS). The modifications to EPCRS give plan sponsors more options for correcting plan errors and a broader ability to self-correct, helping to reduce the need for formal submissions to the Internal Revenue Service.
SECURE 2.0 also brings changes related to Roth contribution requirements – although these have faced some delay. Whilst the Act essentially ends the “age 70 1/2 rule” for Roth IRA contributions, allowing people of all ages to make contributions, it appears that the implementation of this new rule could be facing some delay. This delay could result in individuals over the age of 70 1/2 still being unable to make catch-up contributions to their Roth IRAs for a period of time.
Many of these changes will affect how businesses establish and administer their retirement plans, with lawyers, HR professionals and other corporate leaders needing to ensure compliance with these new provisions. The depth and breadth of the changes contained in SECURE 2.0 undoubtedly warrant a closer examination for legal professionals involved in employee benefits and retirement planning.
For an even deeper dive into the SECURE 2.0 Act and how it impacts retirement plans, the ongoing series of articles by Foley & Lardner LLP are a must-read.