Congress releases SECURE 2.0 technical corrections discussion

On December 6, 2023, the committees of jurisdiction – in the Senate the Committee on Health, Education, Labor and Pensions (HELP) and in the House the Ways and Means Committee and the Education and the Workforce Committee – released a “discussion draft” of proposed technical corrections to SECURE 2.0 legislation passed at the end of last year.

The issues addressed – some of which were raised in a May 2023 letter from Congressional leaders to the Department of the Treasury and IRS – are technical and are not intended to change the substance of SECURE 2.0 as passed.

The proposed technical corrections applicable to retirement plans include:

  • Clarification of timing of SECURE 2.0 increases in the applicable age/required beginning date for required minimum distributions (RMDs).

  • Clarification that the limit on student loan repayments that qualify for a match is increased (where applicable) by the catchup contribution limit.

  • Provision that the starter 401(k) plan contribution limit (currently $6,000 indexed for inflation beginning in 2025) will be the same as the IRA limit (already $6,500 in 2023).

  • Under rules requiring new 401(k) plans to include an automatic enrollment provision, provision that the initial ceiling on automatic contributions would be limited to 10% until 2026 (not, as under current law, 2025).

  • Clarification that the “regular” limits on startup credits would not apply to the increased startup credits for small plans.

  • Provision for reporting under Retirement Savings Lost and Found rules by IRAs receiving mandatory distributions (“cashouts”) from covered plans and by deferred annuity contracts receiving distributions from covered plans.

  • A fix to the catchup contribution glitch – language in SECURE 2.0 which seemed to prohibit catchup contributions by any participant beginning in 2024.

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This is, at this point, only a discussion draft – it’s not unlikely that further technical issues (and, in some cases perhaps, non-technical issues) with SECURE 2.0 will be raised.

We will continue to follow this issue.