SECURE 2.0 Act of 2022
Key updates impacting plan sponsors and participants
Thank you for partnering with us as you navigate the SECURE 2.0 Act of 2022. We will continue to keep you informed about the latest developments and impacts to your plan and participants. Use these resources to support you as you manage your retirement plans and help employees to prepare for and live in retirement.
Provisions
- Provisions
- Milestones
- Archived articles
Nationwide will be your partner to help implement key provisions
Nationwide Retirement Solutions is managing legislative updates through a SECURE 2.0 Program Team.
Nationwide is continuing to manage a detailed plan as we move through the implementation process for key provisions, including:
- Implementing provisions based on their prioritization and/or required timelines
- Moving into implementation for optional provisions
- Connecting with plan sponsors for the rollout of provisions, where needed
We will continue to partner with you to support you as you implement the new provisions. Please review the provisions below to learn about the mandatory and optional provisions to implement in your plan. Please contact your Nationwide Retirement Specialist with any questions or concerns.
| Section | Provision | Description | Effective date |
|---|---|---|---|
| SECURE Act 1.0 | Long-term part-time employees | Requires plans to permit employees who work at least 500 hours but less than 1,000 hours in three consecutive 12-month periods to make elective deferrals to 401(k) plans. SECURE 1.0 refers to these workers as long-term part-time employees (LTPT employees). The rules require service from January 1, 2021, and after to be counted, making 2024 the first year that LTPT employees can become eligible to participate under SECURE 1.0. | 1/1/24 |
| 107 | Increase in age for required beginning date for mandatory distributions | Increases the RMD age to 73 for a person who attains age 72 after December 31, 2022, and age 73 before January 1, 2033; 75 for an individual who attains age 74 after December 31, 2032. | 1/1/23 |
| 125 | Long-term part time workers — 2 year + 403(b) inclusion | Reduces from 3 to 2 the required years of service before long-term part-time workers are eligible to contribute to a plan. Pre-2021 service is also disregarded for purposes of the vesting of employer contributions (and pre-2023 service is disregarded for eligibility and vesting purposes under the new SECURE 2.0 part-time employee provision). Extends the long-term part-time coverage rules to 403(b) plans that are subject to ERISA. | 1/1/25 |
| 302 | RMD excise tax | Reduces the excise tax for failure to take RMDs from 50% of the shortfall to 25%. Further reduces the excise tax to 10% if the individual corrects the shortfall during a two-year correction window. | 1/1/23 |
| 308 | Distributions to firefighters | Extends the age 50 early withdrawal exception for qualified public safety employees to also apply to private sector firefighters receiving distributions from a qualified retirement plan or 403(b) plan. | 12/29/22 |
| 311 | Repayment of qualified birth or adoption distribution limited to 3 years | Requires qualified birth or adoption distributions to be recontributed within three years of the distribution in order to qualify as a rollover contribution. | 12/29/22 |
| 325 | Roth required minimum distribution | Extends the pre-death RMD exemption to Roth amounts in plans. | 1/1/24 |
| 327 | Required minimum distribution spouse designation as an employee | Allows a surviving spouse to elect to be treated as the deceased employee for purposes of the required minimum distribution rules. | 1/1/24 |
| 329 | Modification of eligible age for exemption from early withdrawal penalty | Extends the age 50 exception to the 10% early withdrawal penalty to those qualified public safety employees who have separated from service and have attained age 50 or 25 years of service, whichever comes first. | 12/29/22 |
| 330 | Exemption from early withdrawal penalty for certain state and local government corrections employees | Expands the definition of qualified public safety employee to include certain corrections officers and forensic security employees, thus making them eligible for the age 50 exception to the 10% early withdrawal penalty. | 12/29/22 |
| Section | Provision | Description | Effective date |
|---|---|---|---|
| 338 | Requirement to provide paper statements in certain cases | Modifies the pension benefit statements requirement to generally require that:
- For a defined contribution plan, at least one statement must be provided on paper in written form for each calendar year - For a defined benefit plan, at least one statement must be provided on paper every 3 years |
1/1/26 |
| 603 | Elected deferrals generally limited to regular contribution limit | Individuals with FICA wages of more than $145,000. Under current law, catch-up contributions to a qualified retirement plan can be made on a pre-tax or Roth basis (if permitted by the plan sponsor). Section 603 provides all age 50 catch-up contributions to qualified retirement plans are subject to Roth tax treatment, effective for taxable years beginning after December 31, 2023. An exception is provided for employees with FICA wages of $145,000 or less (indexed) in the prior calendar year.
Historically, in August 2023, the IRS announced an administrative transition period for the first two taxable years to comply with the regulation, which was originally planned for January 1, 2024 |
1/1/26 |
| Section | Provision | Description | Effective date |
|---|---|---|---|
| 109 | Higher catch-up limit | Effective January 1, 2025, participants ages 60 – 63 will have the opportunity to take advantage of additional pre-tax contributions through their defined contribution retirement plan as part of the SECURE 2.0 Section 109 Higher Catch-Up Limit provision. Prior to this date, participants have been eligible for additional age 50 and over (50+) catch-up limits of $7,500 (in 2024). In 2025, participants can still take advantage of the age 50+ catch-up and now can also take advantage of an amount increased to $10,000 (or 50% more than the age 50+ catch-up limit for that year) if they reach ages 60, 61, 62 or 63 by the end of the year. | 1/1/25 |
| 115 | Withdrawals for certain emergency expenses | Allows one penalty-free withdrawal of up to $1,000 per year for “unforeseeable or immediate financial needs relating to personal or family emergency expenses.” The withdrawal may be repaid within 3 years. Only one withdrawal per 3-year repayment period is permitted if the first withdrawal has not been repaid.
Adoption form (PDF) - Email forms to rpublic@nationwide.com |
1/1/24 |
| 304 | Updating dollar limit for mandatory distributions | Increases the involuntary cash-out limit to $7,000 from $5,000. | 1/1/2024 |
| 306 | Eliminate the “First Day of the Month” requirement for governmental section 457(b) plans | Conforms rule for governmental 457(b) plans to rule for 401(k) and 403(b) plans by allowing participants of governmental 457(b) plans to change their deferral rate at any time before the compensation is available to the individual. The provision does not modify the deferral timing rules for 457(b) plans of nongovernmental tax-exempt entities. | 1/1/23 |
| 312 | Employer may rely on employee certifying that deemed hardship distribution conditions are met | Allows a plan administrator to rely on an employee’s self-certification that they have had a safe harbor event that constitutes a deemed hardship for purposes of taking a hardship withdrawal from a 401(k) plan or a 403(b) plan. The administrator can also rely on the employee’s certification that the distribution is not in excess of the amount required to satisfy the financial need and that the employee has no alternative means reasonably available to satisfy the financial need. A similar rule applies for purposes of unforeseeable emergency distributions from governmental Section 457(b) plans.
Adoption form (PDF) - Email forms to rpublic@nationwide.com |
1/1/23 |
| 328 | Long-term care payments paid to the participant | Allows the plan to distribute funds to pay for qualified health insurance premiums (1) directly to the insurer or (2) directly to the participant (but the participant must include a self-certification that such funds did not exceed the amount paid for premiums in the year of the distribution when filing the tax return for that year).
Adoption form (PDF) - Email forms to rpublic@nationwide.com |
12/29/22 |
| Section | Provision | Description | Effective date |
|---|---|---|---|
| 103 | Saver's Match | Modifies the existing Saver’s Credit to make it refundable and turns it into a direct government matching contribution to the taxpayer’s IRA or eligible retirement plan. | 1/1/27 |
| 110 | Student loan matching contributions | Employer contributions can be made on behalf of employees who are making “qualified student loan payments” and are treated as matching contributions, so long as certain requirements are satisfied. | 1/1/24 |
| 127 | Pension-linked emergency savings accounts (PLESAs) | Permits a plan sponsor to amend its plan to offer short-term emergency savings accounts (ESAs) as part of a defined contribution plan. ESAs must be funded post-tax with Roth contributions, and participants may be automatically enrolled at a rate of up to 3% of compensation. Contributions are capped at $2500 (indexed for inflation) or a lower amount determined by the sponsor, and there cannot be minimum contribution or balance requirements. Participants must be allowed to take at least one withdrawal per month, and the first four withdrawals per year cannot be subject to fees. ESAs may be invested in cash, interest bearing deposit accounts, and principal preservation accounts, and there is a fiduciary safe harbor for automatic enrollment. | 1/1/24 |
| 303 | Retirement savings lost & found | Directs the DOL to create an online searchable “Lost and Found” database to collect information benefits owed to missing, lost or nonresponsive participants and beneficiaries in tax-qualified retirement plans and to assist such plan participants and beneficiaries in locating those benefits. | Directs the creation of the database no later than December 2024 |
| 314 | Eligible distribution for domestic abuse victims | Permits certain penalty-free early withdrawals in the case of domestic abuse in an amount not to exceed the lesser of $10,000 (indexed) or 50% of the value of the employee’s vested account under the plan. | 1/1/24 |
| 326 | Exception to penalty on early distributions from qualified plans for individuals with a terminal illness | Creates an exception to the 10% early withdrawal penalty for distributions to individuals whose physician certifies that they have an illness or condition that is reasonably expected to result in death in 84 months or less. The employee also must furnish sufficient evidence to the plan administrator in such form and manner determined by the Secretary of the Treasury. | 12/29/22 |
| 331 | Special rules for use of retirement funds in connection with qualified federally declared disasters | Provides permanent special rules governing plan distributions and loans in cases of qualified federally declared disasters. Up to $22,000 may be distributed to a participant per disaster; amount is exempt from the 10% early withdrawal fee; inclusion in gross income may be spread over 3-year period; amounts may be recontributed to a plan or account during the 3-year period beginning on the day after the date of the distribution; allows certain home purchase distributions to be recontributed to a plan or account if those funds were to be used to purchase a home in a disaster area and were not so used because of the disaster; and extends the repayment period. | 1/26/21 |
| 334 | Long-term care contracts purchase with retirement plan distributions | Permits retirement plans to distribute a certain amount per year for certain long-term care insurance contracts. The amount permitted to be distributed is the lowest of: (1) the amount paid by or assessed to the employee during the year for long-term care insurance; (2) 10% of the employee’s vested accrued benefit in the plan; or (3) $2,500 (this dollar amount will be indexed for inflation beginning in 2025). Distributions from plans and IRAs would be exempt from the 10% penalty on early distributions if used to pay premiums for high quality, long-term care insurance. | 12/29/2025 |
| 602 | Hardship withdrawal rules for 403(b) plans | Confirms the hardship distribution rules for Section 403(b) plans to those of Section 401(k) plans. Therefore, a 403(b) plan may distribute QNECs, qualified matching contributions, and earnings on any of these contributions (including elective deferrals). Also confirms that distributions from a 403(b) plan are not treated as failing to be made upon hardship solely because the employee does not take available loans. | 1/1/24 |
| 604 | Optional treatment of employer matching or nonelective contributions as Roth contributions | Allows a Section 401(a) qualified plan, a Section 403(b) plan or a governmental 457(b) plan to permit employees to designate employer matching or nonelective contributions as Roth contributions. Student loan matching contributions may also be designated as Roth contributions. Matching and nonelective contributions designated as Roth contributions are not excludable from the employee’s income and must be 100% vested when made. | 12/29/22 |
SECURE 2.0 Milestones
2021/2022
Industry milestones
- 1st version of the bill, expanding on Dec. 2019 SECURE Act
- The House of Representatives recently passed the Securing a Strong Retirement (SECURE 2.0) Act of 2022
- Senate Committee on Health, Education, Labor and Pensions adds Rise & Shine draft
- Finance committee approves Enhancing American Retirement Now Act
- Congress passes the SECURE 2.0 Act of 2022 on Dec. 23, enacted on Dec. 29, 2022
Nationwide activities
- Lobbies on Capitol Hill
- Leaders build and amplify support in the industry, continue to draft provisions
- Begins operational analysis to prepare, listens and lobbies while Congress continues to shape the bill(s)
- Creates cross-functional working team, anticipates IT and operational needs
2023
Industry milestones
- The industry seeks technical corrections on key provisions
- Industry conferences take place, legal and regulatory specialists contribute
- Legal interpretations provided to address the SECURE Act and SECURE 2.0
Nationwide activities
- Reviews and unpacks the details of 92 provisions, seeks technical guidance for key provisions
- Begins outreach process with plans with steps for implementation
- Implements final provisions needed for 2023, continue with provisional planning for 2024 and beyond
- Prioritizes mandatory and high-demand provisions
- Continues outreach
2024/2025+
Industry milestones
- Guidance expected for several key provisions
Nationwide activities
- Builds implementation steps for required and optional provisions in 2024 and beyond
- Begins outreach process to plans for optional provisions in 2024 and beyond
- Follows up with plans for feedback on all SECURE 2.0 provisional implementations
Archived SECURE 2.0 previously communicated content
- Nationwide and NAGDCA Discuss SECURE 2.0 Provisions
- SECURE 2.0 Podcast
- SECURE 2.0 Impact Across the Industry
- Changes impacting retirement plans & participants (PDF)
- Education Series material from Advanced Consulting Group (PDF)
- Congress passes legislation for Plan Sponsors and their participants to encourage a "secure" retirement (PDF)
- An analysis of "SECURE 2.0" (PDF)
- Statement from John Carter, President, Nationwide Financial (PDF)