Does SECURE 2.0 Require Immediate Action by 403(b) Plan Sponsors?

A little bird (actually, several little birds) informed me of the recent passage of major retirement plan legislation. Is there any immediate action I need to take as a 403(b) plan sponsor?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

Indeed, the Experts are not surprised that a number of “little birds” informed you of the passage of the SECURE Act 2.0 at year-end, as it is one of the most significant pieces of retirement plan legislation in recent years. Fortunately, given the fact that it was passed at year-end, there are limited provisions that could require plan-sponsor action in the near future (e.g., an increase in the required minimum distribution age and changes to deferrals to governmental 457(b) plans), as most provisions are not effective until 2024 at the earliest. However, there are some long-term action items, including a requirement that catch-up elections be made as Roth after-tax contributions for those making over $145,000 per year (indexed) and a new ERISA 403(b) plan elective deferral eligibility provision for part-time employees, that may require significant time and effort to address, depending on your plan design. Thus, you should consult with your retirement plan counsel, as well as your adviser, regarding the specific impacts of the SECURE Act 2.0 for your plan.

For more on the SECURE Act 2.0, check out this article.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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