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Feeling SECURE?


Feeling SECURE? We’re still fairly new at implementing the first one, and here comes the second. In an Oct. 24 session of the 2022 ASPPA Annual conference, two industry experts offered a deep dive into what Part II may portend. 

“The legislative process is a mystery,” said American Retirement Association Education Counsel Robert Richter, as he and ARA Director of Technical Education Bob Kaplan kicked off their discussion of legislation before the Senate. 

It may be mysterious, but that isn’t necessarily cause for foreboding, Kaplan suggested. He offered some comfort in the notion that legislative changes “to put more arrows in our quiver is a very good thing.” 

For purposes of the discussion, they treated the legislation—the Securing a Strong Retirement Act (SSRA), passed by the House of Representatives on March 29 in a 414-5 vote—the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE), passed by the Senate Health, Education, Labor and Pensions Committee on June 14—and the Enhancing American Retirement Now (EARN) Act, passed by the Senate Finance Committee on June 22—as a single bill. 

Following are highlights of the discussion.

Long-Term, Part-Time Employees

The legislation would change the requirement that a long-term, part-time (LTPT) employee must have at least 500 hours of service before he or she can be vested from three consecutive years to two. Kaplan remarked that it would be “A little bit of challenge” and that it would be hard to educate clients about that.

But there also is less challenging news, he indicated. The legislation calls for this provision to become effective in 2023, but, Kaplan remarked, it is a good thing that vesting would count retroactively, starting in 2021. 

Top Heavy Fix

The EARN Act provides a partial fix for the situation in which if LTPTs are included in the plan, if there is no safe harbor provided to those with less than one year of service, then the top-heavy exemption is lost. 

The EARN Act refers to the safe harbor match. Richter said he hopes the provision will become part of the final SECURE 2.0 bill. 

Family Attribution Rules

Under current law, if spouses have a minor child, then the child is deemed to own the stock of the parents. The legislation would remove attribution due to minor children. “This is a very good provision,” said Kaplan, but that does not necessarily spell guaranteed success. Richter noted that there is some confusion concerning the matter. “We’re talking about some pretty refined areas” on this, he said. 

Hardship Distributions

Under current rules, Kaplan and Richter noted, certification that the deemed hardship conditions are met is permitted only concerning whether the participant has other financial means. But the EARN Act provides that the Treasury can issue regulations excepting reliance if the administrator has knowledge to the contrary.

“We’re going in the right direction,” said Kaplan. 

Required Minimum Distributions

The legislation before the Senate calls for changes to the age at which RMDs are to begin. But the bills originating in the House and Senate differ on the age. 

The SSRA would change the RMDs in the following ways: 

  • age 73, beginning in 2023
  • age 74, beginning in 2030; and 
  • age 75, beginning in 2033.

The EARN Act would set the age at 75, beginning in 2032. 

“This is a very, very costly provision,” said Kaplan, explaining that is why the change in the age at which RMDs are to begin is delayed so much and is beyond the 10-year window for congressional budget-scorekeeping purposes.

Emergency Savings

Members of Congress recognize the need to help employees save for emergency spending,” said Richter. The legislation would allow the establishment of “side car” accounts that would not be part of qualified plans. 

There is concern, he said, that if the cap is too high, that would dissuade people from putting as much into a retirement account. Still, said Kaplan, “any time we can encourage employees to save is a good thing.”


The legislation would make some changes to the IRS Employee Plans Compliance Resolution System (EPCRS), Richter and Kaplan noted. 

It provides that there would be no time limit on self-correction for eligible inadvertent failures, such as a mistake in oversight or in applying procedures. It also would address the safe harbor correction for fixing automatic contribution failures. 

While these provisions are in both the SSRA and the EARN Act, the two bills do differ regarding effective dates. The former calls for these provisions to be effective immediately on the date the measure is enacted; the latter says that guidance on it must be issued within two years of enactment. 

Lost and Found

Provisions addressing the money left by missing participants are “sort of like a ping pong ball” that are “all over the board” on what to do about these amounts, said Richter. 

For instance, the SSRA provides that the Department of Labor would create an online searchable database with information regarding unclaimed benefits, as well as missing and lost participants. The EARN Act provides that cashouts of amounts of less than $1,000 must be transferred to the Treasury if the participant is unresponsive.

Start-Up Credit

Under current rules, the start-up credit for small employers is 50% of start-up costs with a cap of $1,500 to $5,000 depending on the employer’s size. Both the SSRA and the EARN Act clarify that the credit applies when joining a MEP, effective after the date of enactment. But they do have some differences, as well.

For instance:

  • the EARN Act would increase the 50%-of-costs credit to 75% for those with less than 26 employees, effective after 2023; while 
  • the SSRA, effective for tax years after 2023, would increase the 50% credit to 100% if there are fewer than 50 employees. It also would create a new credit of up to $1,000 of employer contributions per employee in the first year, grading down over five years. 

Starter 401(k)s

These accounts would be intended for employers with no retirement plan. The default enrollment contribution rate would be between 3% and 15%, and the contribution limit would be the same as that of IRAs. There would be no ADP test or top-heavy test. It would be effective after 2023. 

“It’s good that this was included in the EARN Act,” said Richter. “It’s good to have additional arrows in the quiver,” Kaplan reiterated. 


A “latecomer” only contained in the EARN Act, said Richter of provisions that would allow:

  • contributions to be designated as Roth;
  • additional employer contributions of up to the lesser of 10% of compensation or $5,000, effective after 2023; and
  • employer replacement of SIMPLE plans with a SIMPLE 401(k) or other 401(k) during the year, effective after 2023. 

Qualified Disaster Distribution

The provision would codify that it’s “one and done” and would not have to be enacted every time there is a disaster, said Richter. It also would allow: 

  • distributions of $22,000;
  • recontributions of amounts distributed to purchase a home before the disaster; and 
  • employers to provide higher limits and longer repayment period for affected individuals.

SECURE Deferral Arrangements

What makes this provision, said Kaplan, is that it would create a small employer tax credit equal to a matching contribution of the first 2% of non-highly compensated employee deferrals for the first five years of participation.

Automatic Contribution Arrangements

The SSRA states that 401(k)s and 403(b)s, not SIMPLEs, would have to provide:

  • 3% at enrollment and a 1% increase until it reaches 10%, but not more than 15%;
  • 90 days to unenroll;
  • exemption for church, government, and businesses less than three years old and with 10 or fewer employees; and 
  • that they are effective for new plans after Dec. 31, 2023. 

Timing of Conforming Plan Amendments

If SECURE 2.0 is enacted, plans would not need to be updated until 2024; governmental plans would have until 2026. But the plan amendments also would apply to the first SECURE Act and the RMD provisions of the CARES Act. Richter indicated that he expects this provision to change. “We know this is something that they’re going to fix,” he said.