The Internal Revenue Service has just released new guidance in the form of questions and answers addressing several key provisions contained in the SECURE 2.0 Act of 2022.
The IRS advises that the notice (Notice 2024-02) is not intended to provide comprehensive guidance as to the specific provisions of the SECURE 2.0 Act, but rather is intended to provide guidance on discreet issues to assist in commencing implementation of these provisions.
The 81-page notice—which the American Retirement Association’s regulatory affairs and education counsel are currently reviewing—addresses various issues under the following sections of SECURE 2.0:
- Expanding automatic enrollment in retirement plans (Section 101)
- Modification of credit for small employer pension plan startup costs (Section 102)
- Military spouse retirement plan eligibility credit for small employers (Section 112)
- Small immediate financial incentives for contributing to a plan (Section 113)
- Contribution limit for SIMPLE plans (Section 117)
- Exception to the additional tax on early distributions from qualified plans for individuals with a terminal illness (Section 326)
- Employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year (Section 332)
- Cash balance clarifications (Section 348)
- Safe harbor for correction of employee elective deferral failures (Section 350)
- Provisions relating to plan amendments (Section 501)
- SIMPLE and SEP Roth IRAs (Section 601)
- Optional treatment of employer contributions or nonelective contributions as Roth contributions (Section 604)
Meanwhile, the notice further advises that the Treasury Department and IRS continue to analyze the various provisions of SECURE 2.0 and anticipate issuing further guidance, including regulations, as appropriate.
To that end, Treasury and IRS invite comments regarding the various issues discussed in this notice. They are particularly interested in receiving input on:
- Section 113 with respect to a de minimis financial incentive that is provided by a party other than the employer; and
- Section 348 concerning whether there are situations under which a plan with a statutory hybrid benefit formula within the meaning of §1.411(a)(13)-1(d)(4) that is not described in Q&A H-2 of this notice would be amended pursuant to Section 348, as described in Section II.H of the notice.
Comments should be submitted by Feb. 20, 2024, and should include a reference to Notice 2024-02.
