Important SECURE 2.0 and Interim Amendment Update
Background
The Internal Revenue Service (IRS) published Notice 2024-03 on December 20, 2023, including a “2023 Cumulative List” outlining certain plan provision requirements and amendment deadlines. Plans using a pre-approved document are required to adopt interim amendments to remain in compliance with law changes that are implemented between regular plan restatement cycles. Document providers will use these guidelines to prepare the new cycle 4 pre-approved documents as well as required interim amendments for adopting SECURE 1.0 and SECURE 2.0 provisions, among others.
This Notice also extends the deadline for SECURE 2.0 interim amendment adoption from December 31, 2025 to December 31, 2026. Your Alliance team will help with the preparation of these interim amendments, as applicable.
Details – What’s Included in the 2023 Cumulative List?
Many of the newest changes relate to the provisions of the SECURE 2.0 Act of 2022. A few key changes are listed below:
- Required Minimum Distributions (RMDs) – The RMD age for participants born or on after January 1, 1951, must be increased to 73 from 72, per section 107 of SECURE 2.0.
- Qualifying Longevity Annuity Contract (QLAC) – The amount that can be spent from a defined contribution plan to purchase a QLAC was increased to $200,000 from $125,000 and the percentage maximum was removed, per section 202.
- Transfers and Distributions – Certain transfers and distributions of lifetime income investments may be permitted if such option is no longer authorized to be held as investment options under the plan.
- Cash Out Limit – The involuntary cash out limit is increasing to $7,000 from $5,000.
- Domestic Abuse Distribution – Victims of domestic abuse may withdraw up to $10,000 (indexed) from a defined contribution plan without the 10% excise tax penalty.
Contact your Alliance Pension Consultants representative for insights into how this rule might impact your plan. We are happy to help you.