Effective in 2023, the SECURE 2.0 Act, now allows participants in a 401(a) qualified plan (such as a 401(k) or profit sharing plan), 403(b) plan, or governmental 457(b) plan to designate employer matching or nonelective contributions as Roth contributions, if...
Retirement Plan Law
Penalty Free Early Withdrawals for Qualified Public Safety Employees
The Defending Public Safety Employees' Retirement Act of 2015 revised the Internal Revenue Code of 1986 to re-define the description of “qualified public safety employees” to include Federal law enforcement officers, Federal firefighters, customs and border protection...
Modified Retirement Plan Notices to Unenrolled Participants
The SECURE 2.0 Act raised the age for taking RMDs from 72 to 73 effective January 1, 2023. To clarify the distinction regarding when an account holder should begin taking RMDs, those who turned 72: In 2022, must take their distribution no later than April 1, 2023. In...
Clarification of substantially equal periodic payment rule
Current law imposes a 10% additional tax on early distributions from tax-preferred retirement accounts, but an exception applies to substantially equal periodic payments that are made over the account owner’s life expectancy. This provision provides that the exception...
Increased time to adopt beneficial plan amendments
Discretionary amendments that increase participants’ benefits or add nonelective contributions may be adopted by the due date of the employer’s tax return, plus extensions, rather than by the end of the plan year in which the amendment is effective. Note that this...
Hardship withdrawal rules
Under current law, the distribution rules for 401(k) and 403(b) plans are treated differently. This provision conforms the 403(b) rules to the 401(k) rules whereby 403(b) plans may now make hardship distributions from the same contribution sources as 401(k) plans, and...
Surviving spouse election to be treated as employee
Allows a surviving spouse of a participant who dies before commencing RMDs to elect to be treated as the employee for RMD purposes, thereby delaying when RMDs must commence.
Reform of family attribution rule
The aggregation rules that determine the degree of common ownership in a business have been updated in two situations: Inequities addressed where spouses with separate businesses reside in a community property state versus those who reside in separate property states...
Domestic Abuse Victims allowed Penalty-free Withdrawal from Retirement Plans
Participants who experienced domestic abuse are allowed to withdraw the lesser of $10,000, indexed for inflation, or 50% of the participant’s vested account. Distributions are not subject to the 10% tax on early distributions made under this provision. Participants...
Application of top-heavy rules to defined contribution plans covering excludable employees
Under current law, employers of a Top Heavy plan may be required to contribute 3% of pay to certain eligible employees, including those that became eligible prior to attaining age 21 and with less than 1 Year of Service. The new law will allow an employer to complete...