So, now it’s official – and much of the newly enacted SECURE Act is effective immediately. There’s a lot to know, a lot for which to plan, and a lot to share. This week we asked readers what they knew – what they didn’t – and what they were least “SECURE” regarding.
We listed a number of the key provisions (there are about 30), and asked readers to indicate which they had heard/read about. Perhaps not surprisingly, the changes in required minimum distribution dates (94%) and “open” MEPS (91%) were most cited here. The rest fell out as follows:
89% - allowing long-term part-time workers to participate in 401(k) plans
83% - increasing the auto enrollment safe harbor cap from 10% to 15% of pay
83% - increases the tax credit for new plans from the current cap of $500 to $5,000, and small employers that implement an automatic enrollment feature in their retirement plan design are eligible for an additional $500 credit
80% - simplifying safe harbor 401(k) rules
79% - enhancing portability of lifetime income options
76% - providing an expanded fiduciary safe harbor for selection of lifetime income provider
74% - allowing plans adopting by the filing due date to be treated as in effect as of close of year
74% - new hardship withdrawal up to $5,000 for expenses associated with birth or adoption of a child
67% - requiring disclosures regarding lifetime income
62% - significant increase in penalties for failure to provide 1099-R, 8955-SSA, and timely file Form 5500
Two items that remained relatively obscure, however:
38% - modifying the treatment of custodial accounts on termination of 403(b) plans
33% - modifying the nondiscrimination rules to protect longer service participants in defined benefit plans
‘Excite’ Ed
Asked which provision(s) they were most excited about, three items stood apart:
81% - Required Minimum Distribution age increases to 72 from 70½
69% - simplifying safe harbor 401(k) rules
49% - increases the tax credit for new plans from the current cap of $500 to $5,000, and small employers that implement an automatic enrollment feature in their retirement plan design are eligible for an additional $500 credit
A second grouping included:
38% - increasing the auto enrollment safe harbor cap from 10% to 15% of pay
38% - allowing plans adopting by the filing due date to be treated as in effect as of close of year
37% - “open” MEPs
23% - enhancing portability of lifetime income options
23% - providing an expanded fiduciary safe harbor for selection of lifetime income provider
20% - allowing long-term part-time workers to participate in 401(k) plans
And then there were these:
15% - new hardship withdrawal up to $5,000 for expenses associated with birth or adoption of a child
14% - modifying the treatment of custodial accounts on termination of section 403(b) plans
11% - requiring disclosures regarding lifetime income
8% - modifying the nondiscrimination rules to protect longer service participants in defined benefit plans
5% - significant increase in penalties for failure to provide 1099-R, 8955-SSA, and timely file Form 5500
Curiosities?
The ordering shifted somewhat when asked which provision(s) they were curious about:
59% - “open” MEPs;
48% - simplifying safe harbor 401(k) rules
41% - enhancing portability of lifetime income options
38% - providing an expanded fiduciary safe harbor for selection of lifetime income provider
36% - requiring disclosures regarding lifetime income
34% - allowing long-term part-time workers to participate in 401(k) plans
26% - significant increase in penalties for failure to provide 1099-R, 8955-SSA, and timely file Form 5500
25% - allowing plans adopting by the filing due date to be treated as in effect as of close of year
21% - modifying the treatment of custodial accounts on termination of 403(b) plans
16% - modifying the nondiscrimination rules to protect longer service participants in defined benefit plans
16% - Required Minimum Distribution age increases to 72 from 70½
15% - increases the tax credit for new plans from the current cap of $500 to $5,000, and small employers that implement an automatic enrollment feature in their retirement plan design are eligible for an additional $500 credit
13% - increasing the auto enrollment safe harbor cap from 10% to 15% of pay
8% - new hardship withdrawal up to $5,000 for expenses associated with birth or adoption of a child
But asked to pick a single provision that they were most curious about, it narrowed pretty quickly to:
34% - “open” MEPs
14% - simplifying safe harbor 401(k) rules
14% - providing an expanded fiduciary safe harbor for selection of lifetime income provider
9% - enhancing portability of lifetime income options
6% - allowing long-term part-time workers to participate in 401(k) plans
5% - Required Minimum Distribution age increases to 72 from 70½
Modifying the treatment of custodial accounts on termination of 403(b) plans, requiring disclosures regarding lifetime income, and increasing the tax credit for new plans from the current cap of $500 to $5,000, and small employers that implement an automatic enrollment feature in their retirement plan design are eligible for an additional $500 credit, and significant increase in penalties for failure to provide 1099-R, 8955-SSA, and timely file Form 5500 drew 3% each.
Reader Comments
Not surprisingly, this week’s subject engendered a lot of comments from readers – here’s a sampling:
Always more rules and regs, or changes to existing rules and regs... will we ever see eliminations of rules and regs? The Vogons would be proud of the voluminous administrative state the pension world finds itself in!
Just in time for testing season – yay! (not).
Lifetime income provider safe harbor was a big win for the insurance industry. Not so sure I can say the same is true for participants!
Thanks for the SECURE Act portal. It has been a godsend.
Absolutely thrilled about the minimum required distribution age increase to 72. 70½ was always a ridiculous age...
We’re now relying on state insurance associations for federal safe harbor certifications. Underfunded and political slush funds historically.
Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it. Ferris Bueller was wise beyond his years. :)
When you say “curious” and “excited” in your questions, I’m sure you implied those in a positive way. I don't. The one's I'm most curious about and excited about – I am curious and excited because of the problems they will cause – especially open MEPs....
So now we have DC documents in with the IRS for the next restatement and by the time they come out they are going to be out of date. Once again we are going to have to explain to clients that we need to amend their “new” documents. Do you suppose the IRS would let the documents be amended for this tax law?
I expect this will shape the agenda at Summit!
Speaking of which, respondents to this week’s reader poll also shared a lot of questions they – and perhaps you – have about the SECURE Act, it’s timing and implications. We’ve gathered those up, and we’ll have answers for you in a bit – or you might want to check out the upcoming (Feb. 6) webcast on the subject – not to mention the 2020 NAPA 401(k) Summit, where you know you’ll get even more great information! Don’t forget to register at https://napasummit.org.
Oh – and you can keep up till then with our exclusive SECURE Act page in our Industry Intel section, at https://www.napa-net.org/industry-intel/hot-topics/secure-act. Not to mention our handy “At a Glance” table of all the key provisions and their effective date(s) – at https://www.napa-net.org/news-info/daily-news/secure-act-description-and-effective-dates
Thanks to everyone who participated in this week’s NAPA-Net Reader Poll!
