The SECURE 2.0 act is aimed at improving and increasing retirement-savings opportunities for working Americans. Read on to learn more about the SECURE Act 2.0 Division T provisions and how it can impact you and your retirement plan.

The SECURE Act 2.0
The Consolidated Appropriations Act of 2023 was enacted on December 29, 2022. Division T of the Act was the SECURE 2.0 Act of 2022. This section contains the retirement plan changes we will be discussing below.

SECURE Act 2.0 Provisions, Effective January 1, 2023
Increased Start Up Plan Tax Credit
•In SECURE 1.0, has been applied a tax credit for the adoption of a new retirement plan by a small employer (less than 100 employees) for 50% during the first 3 years of the retirement plan. The credit is $500 or the lesser of $250 per non-highly compensated employee capped at $5,000.
•In SECURE 2.0, a tax credit of 100% of plan startup costs for employers with no more than 50 employees. The credit is $500 or the lesser of $250 per non-highly compensated employee capped at $5,000.
Tax Credit for Employer Contributions
•Less than 50 employees (phase out 50-100 ees); max credit is $1,000 per employee (graded percentages each year)

Mandatory Requirements:
• A QACA Non-Elective Contribution Notice to comply with ACP Safe Harbor notice requirements.
Optional Plan Provisions to Adopt:
• Roth Employer Contributions if the employee elects
• Sole Proprietor Deferrals permitted for a retroactive plan
• Employee Certification of Hardship Distributions
• Small Deferral Incentives – example: gift card if the employee enrolls
• Roth SEP and SIMPLE IRA contributions if the employee elects
• 457(b) Deferral Election – not first of month/immediately effective
• 403(b) MEPs and PEPs allowed
• Increased RMD Age
• 2020: Age 72
• 2023: Age 73
• 2033: Age 75
• Reduced RMD Penalties
 It was 50% – and it is now reduced to 25%
 Can reduce to 10% if certain criteria are met
§ A 10% early distribution penalty won’t apply to emergency personal expense
§ A 10% early distribution penalty won’t apply to individuals with a terminal illness
§ Unenrolled participant notices eliminated (annual reminder notice only)

SECURE Act 2.0 Provisions, Effective January 1, 2024
Mandatory Requirements:
• Long-term Part-Time vesting changes.
• Certain catch-up deferrals must be Roth – No Roth/No catch-up
Optional Plan Provisions to Adopt:
• Emergency Savings Accounts – capped at $2,500
• Match Student Loan Repayments – ee certifies/matched like deferral
• SIMPLE IRA to Safe Harbor 401(k) conversion mid-year permitted
• Starter 401(k)/Safe Harbor 403(b) – deferral only; auto enroll 3%
• Expanded 403(b) hardship sources – now like 401(k) plans
• Simple IRA deferral limit 10% higher – less than 26 ee’s=automatic; over 26 increased employer contributions.
• The $5,000 cash-out limit will be raised to $7,000.
• Surviving Spouse RMDs based upon spouse’s age.
• No RMDs from Roth Accounts – IRA and qualified plans
• A 10% early distribution penalty doesn’t apply to equal payments
• A 10% early distribution penalty doesn’t apply to domestic abuse distributions
• Qualified Long Term Care Distributions (after 12/29/2023)
• Prevents Parent/Child attribution from creating a control group between separately owned spousal businesses

SECURE Act 2.0 Provisions, Effective January 1, 2025
The Mandatory Requirements:
• A Mandatory Auto-Enrollment at 3% – permissible withdrawals required
• Long-term Part-time reduced to 2 years with more than 500 hours. – includes 403(b) plans. NOTE: the 3-year rule applies for the 2024 plan year under 1.0
Optional Plan Provisions to Adopt:
§ Larger Catch Up at 60, 61, 62, and 63 – 150% of the 2024 catchup limit
§ Plan document deadline to amend for SECURE 2.0 (2027 for governmental and union)

SECURE Act 2.0 Provisions, Effective January 1, 2027
Optional Plan Provisions to Adopt:
• Saver’s Match – replaces Saver’s credit. Employee contributions partially match based upon AGI from 20,500 to 71,000 based upon filing status.
§ Payable after-tax return is filed
§ Participant elects where the match should go
§ Plan can choose not to accept
§ For less than $100, the participant can take a tax credit