Currently, plan sponsors are permitted to implement automatic enrollment and automatic escalation in 401(k) and 403(b) plans. The Act requires new 401(k) and 403(b) plans to automatically:

There are some exceptions for new and small businesses. This provision applies to plan years beginning after December 31, 2024.

The SECURE Act requires that 401(k) plans permit participation by an employee who worked at least 500 hours (but less than 1,000 hours) per year for three consecutive years.

The Act changes the participation requirement by long-term part-time (LTPT) employees working more than 500 but less than 1,000 hours per year to two consecutive years instead of three.

The provision applies to plan years beginning after December 31, 2024.

Currently, 401(k) plans and 403(b) plans are not permitted to provide for financial incentives to encourage contributions.

The Act provides for an exemption from the Code and ERISA so that that participants may receive de minimis financial incentives (not paid for with plan assets), for contributing to a 401(k) or 403(b) plan.

The provision applies to plan years beginning after the date of enactment.

Currently, the Code does not permit matching contributions based on student loan repayments. The Act permits employer contributions to be made based on an employee's student loan payments (up to the 401(k) contribution limit) for 401(k), 403(b), SIMPLE IRAs and 457(b) plans. The student loan repayments are not taken into account as contributions under the plan.

The provision is effective for plan years beginning after December 31, 2023.

Currently, employer matching contributions cannot be made as Roth contributions.

The Act permits a 401(a), 403(b), or a governmental 457(b) plan to allow employees to choose whether a matching contribution is a Roth contribution.

This provision is effective on the date of enactment.

The Act allows employers that do not already sponsor a qualified retirement plan to offer a "starter 401(k) plan" to employees (or starter 403(b) plan). Under the plan, employees can be auto-enrolled to make elective contributions between three and 15 percent (up to $6,000, indexed for inflation after 2024), if they have the ability to opt-out of participation. Employees age 50 or older may make an additional catch-up contribution of $1,000. Starter 401(k)/403(b) plans are not subject to the top-heavy rules of Code Section 416.

This provision is effective for plan years beginning after December 31, 2023.

Currently, the catch-up contribution limits for 401(k), 403(b), governmental 457(b) and SIMPLE plans are indexed for inflation. Catch-up contributions apply to employees who have attained age 50.

The Act increases catch-up contribution limits for individuals age 60-63 to the greater of:

For SIMPLE plans, the Act increases the catch-up contribution limit for individuals age 60-63 to the greater of:

The participant's compensation for the year reduced by any other elective deferrals of the participant for the year.

This provision is effective for taxable years beginning after December 31, 2024.

The SECURE Act provides that a new 401(k) plan for a sole proprietor can be funded with employer contributions by the end of the tax return deadline, but elective deferrals must be made by December 31 of the prior year.

The Act changes this requirement to provide that for the first plan year of a sole proprietor's 401(k) plan, elective deferrals can be made by the individual's tax return deadline.

This provision is effective for plan years beginning after the date of enactment.

Currently, catch-up contributions can be made on a pre-tax or Roth basis to 401(k), 403(b), and governmental 457(b) plans for individuals age 50 or older.

The Act requires catch-up contributions to be Roth contributions, with an exception for employees whose wages do not exceed $145,000. This does not apply to SIMPLE IRAs or SEPs.

This provision is effective for taxable years beginning after December 31, 2023.

The Act allows employers to make nonelective contributions to SIMPLE plans of up to 10% of compensation for each eligible individual who earns at least $5,000 from the employer for the year. The nonelective contributions are limited to $5,000 (indexed for cost-of-living beginning in 2025) per employee per year.

This provision is effective for taxable years beginning after December 31, 2023.

Currently, hardship distributions may be made on account of an immediate and heavy financial need or unforeseeable emergency. These needs are evaluated using a facts and circumstances test. (See Hardship Distribution Toolkit.)

The Act permits employees to self-certify in writing that they have a safe harbor event to take a hardship distribution from a 401(k), 403(b), or 457(b) plan. Under the Act, substantiation requirements for hardship withdrawals are eliminated.

This provision is effective for plan years beginning after the date of enactment.

A new distribution rule for 401(k), 403(b), and governmental 457(b) plans permits participants to take the following penalty-free withdrawals (exempt from the 10% additional tax on early distributions) of:

The long-term care contracts provision is effective three years after the date of enactment (Section 334). The domestic abuse withdrawal is effective for distributions made after December 31, 2023 (Section 314).

The Act also provides for a waiver of the 10% additional tax for distributions to a terminally ill participant, effective for distributions made after enactment (Section 326).

Currently, a qualified retirement plan may automatically cash-out a vested participant's benefit that is between $1,000 and $5,000 and roll this amount over to an IRA. The Act increases the $5,000 amount to $7,000.

This provision is effective for distributions made after December 31, 2023.

Under current law, annuity payments may generally not increase. The Act permits a distribution of a benefit from a retirement plan (other than a defined benefit plan) in the form of a commercial annuity that:

This provision is effective for calendar years ending after the date of enactment.

Currently, the required beginning date for required minimum distributions (RMDs) is age 72 (as required under the SECURE Act). The Act increases the required beginning date to:

This provision is effective for distributions made after December 31, 2022, for individuals who turn 72 after that date.

The Act includes a new addition to Code Section 72(t)(2) that allows a new exception to the 10% penalty tax for withdrawals from qualified retirement plans and IRAs for certain emergency personal expense distributions. For this purpose, emergency expenses are defined as any distribution to an individual for an unforeseen or immediate financial need related to necessary personal or family emergency expenses. Participants may take up to $1,000 in a calendar year and may self-certify in writing that the expense is an emergency personal expense distribution. The distribution may be repaid within three years. No additional emergency distributions may be made in the three-year repayment period unless the original distribution is repaid or the total contributions to the plan (elective deferrals and employee contributions) during the three-year repayment period exceed the amount of the original emergency distribution.

This provision applies to distributions made after December 31, 2023.

Currently, if an individual's account in a defined contribution plan holds an annuity, the account must be bifurcated for purposes of applying the required minimum distribution rules. The Act allows employees to elect to have the RMD calculated by aggregating the account balance and the value of the annuity.

This provision is effective as of the date of enactment.

The Act allows up to $22,000 per year to be distributed from an individual's retirement plan or IRAs for individuals affected by a federally declared disaster. The distribution is not subject to the 10% additional tax and may be repaid during the three-year period beginning after the date of the distribution. Amounts that are distributed before the disaster to purchase a home can also be recontributed.

In addition, employers may provide larger loan amounts for affected individuals and permit additional time for repaying plan loans by affected individuals.

This provision is effective for disasters occurring on or after January 26, 2021.

Currently, there is an excise tax on the amount distributed during a taxable year if that amount is less than the required RMD for the year. This excise tax is 50% of the shortfall. The Act reduces the excise tax from 50% of the shortfall to 25% of the shortfall. The Act reduces the excise tax to 10% if corrected during a specified time frame.

This provision is effective for taxable years beginning after the date of enactment.

Currently, the limit for how much a 401(k) plan or IRA can use to purchase a Qualified Longevity Annuity Contract (QLAC) is the lesser of $145,000 or 25% of the individual's account balance. The Act eliminates the 25% requirement and increases the $145,000 amount to $200,000 (indexed for inflation) that can be used from an account to purchase a QLAC. The Act also makes other clarifications to the QLAC rules.

This provision is effective for contracts purchased or received in an exchange on or after the date of enactment.

Currently, there is no limit by which a QBAD may be repaid to qualify as a rollover distribution (see Practice Note, Qualified Birth or Adoption Distribution Under the SECURE Act). The Act requires QBADs to be recontributed within three years to qualify as a rollover contribution.

This provision is effective for distributions made after the date of enactment.

Currently, disability retirement plan payments are included in taxable income. The Act provides that service-related disability payments from 401(a), 403(a), governmental 457(b), or 403(b) plans are exempt from gross income.

This provision is effective for amounts received in taxable years beginning after December 31, 2026.

Currently, the 10% tax penalty on early distributions from retirement accounts does not apply to substantially equal periodic payments that are made over an individual's life expectancy. The Act clarifies that the exception continues to apply in the case of an account rollover, an exchange of an annuity providing the payments, or an annuity that satisfies the RMD rules.

This provision is effective for annuity distributions on or after enactment. It is effective for transfers, rollovers, and exchanges after December 31, 2023.

Currently, pre-death RMDs are required for Roth accounts in employer retirement plans, but are not required for Roth IRA owners. The Act eliminates the pre-death distribution requirement for Roth accounts in employer plans.

This provision is effective for taxable years beginning after December 31, 2023, but does not apply to distributions that are required with respect to years beginning before January 1, 2024.

Currently, the Saver's Tax Credit is provided to individuals who contribute to retirement plans and IRAs, in an amount up to $2,000 (phased out based on income).

The Act changes the Saver's Tax Credit into a federal matching contribution that will be deposited on a pre-tax basis into an individual's retirement plan or IRA. The matching contribution is 50% with a maximum match of $2,000, and is phased out based on income.

This provision is effective for taxable years beginning after December 31, 2026.

Currently, for small businesses (up to 100 employees) that start a new retirement plan, there is a credit of 50% of start-up costs with a cap of $500 to $5,000, depending on the size of the employer, for up to three years.

The Act:

The additional credit applies to employers with up to 50 employees (with a phase out between 51 and 100 employees).

This provision is effective for taxable years beginning after December 31, 2022.

The Act provides that small employers joining a multiple employer retirement plan (MEP) may receive the start-up credit for their first three years in the MEP, regardless of how long the MEP has existed (see Practice Note, Multiple Employer Retirement Plans (MEPs)).

This provision is effective retroactively to taxable years beginning after December 31, 2019.

The Act provides for a new income tax credit for small employers that employ military spouses and make them immediately eligible for defined contribution plan participation, subject to other requirements. The credit is equal to $200 per military spouse, plus up to $300 for contributions made by the employer, for up to three years.

This provision is effective for taxable years beginning after the date of enactment.

The Act expands the Employee Plans Compliance Resolution System (EPCRS) (see Correcting Qualified Plan Errors Toolkit).

Currently, EPCRS contains procedures to self-correct certain errors under EPCRS limited to operational failures that are insignificant and corrected within a three-year period. The Act generally permits any inadvertent failure to be self-corrected under EPCRS within a reasonable period after the failure is identified, subject to the following exceptions:

This provision is effective on the date of enactment.

Currently, EPCRS provides for rules to correct for missed deferrals under automatic enrollment. The Act provides a safe harbor correction method for reasonable administrative errors in automatic enrollment or automatic escalation, if the error is:

The relief is available for 401(a), 403(b), and 457(b) plans and IRAs.

This provision is effective for errors after December 31, 2023.

Currently, EPCRS contains procedures to correct overpayments made from qualified retirement plans, including obtaining the overpayments from the participant to maintain the tax qualified status of the plan.

The Act provides that a qualified retirement plan (401(a), 403(a), 403(b), and governmental plans, not including a 457(b) plan) does not lose its tax qualified status because the plan fails to recover an "inadvertent benefit overpayment." The Act also contains fiduciary relief for the failure to make the plan whole. If plan fiduciaries proceed with recoupment, there are limitations and protections for retirees.

This provision is effective on the date of enactment.

Currently, qualified plans may automatically distribute account balances of less than $5,000 to employees who have a distributable event, without their consent. If the account balance is more than at least $1,000, the involuntary distribution must be rolled over into an IRA for the benefit of the employee unless the employee elects otherwise. The Act adds an exemption to the prohibited transaction excise tax to retirement plan service providers that provide plan sponsors with automatic portability services. An automatic portability transaction involves the transfer of an individual's IRA (established due to an involuntary distribution) to the individual's new employer's retirement plan (other than a defined benefit plan). The plan service provider must meet certain requirements to take advantage of the exemption, including acknowledging fiduciary status in relation to the IRA, satisfying notice provisions, and accepting only reasonable compensation for its services.

This provision is effective for transactions on or after 12 months after the date of enactment.

Currently, a plan fiduciary must provide performance and benchmark data to participants about their investment options. The Act requires the existing regulations to be amended to permit blended benchmarks for comparing investment returns for designated investment alternatives that contain a mix of asset classes (such as target date funds).

The Act directs the DOL to update the regulations within two years after enactment.

Currently, pooled employer plans (PEPs) are required to designate a bank trustee to collect contributions and implement written collection procedures. The Act provides that a named fiduciary may be designated to collect contributions and implement written collection procedures.

This provision is effective for plan years beginning after December 31, 2022.

Currently, if a plan is top-heavy, minimum contributions or benefits must be made to non-key employees with a faster vesting schedule. The Act permits a top-heavy plan that covers otherwise excludable employees to perform top-heavy tests separately on non-excludable and excludable employees.

This provision is effective for plan years beginning after December 31, 2023.

Currently, family attribution rules determine who is the employer for testing and distributions (see Practice Note, Controlled Group and Affiliated Service Group Rules). The Act amends stock attribution rules regarding parents and minor children, and spouses in community property states.

This provision is effective for plan years beginning after December 31, 2023.

Currently, discretionary plan amendments must be adopted by the end of the effective date plan year (see Practice Note, Amending Qualified Retirement Plans).

The Act permits stock bonus, pension, profit-sharing, or annuity plans to make discretionary plan amendments to increase benefits up until the employer's tax filing deadline (including extensions) for the taxable year in which the amendment is effective.

This provision is effective for plan years beginning after December 31, 2023.

Currently 403(b) plan investments are limited to annuities and mutual funds and cannot be in a group trust with any assets other than those of a regulated investment company (see Practice Note, Code Section 403(b) Plans: Overview). The Act permits 403(b) plans to invest in collective investment trusts (CITs) (investment funds for retirement plan investors similar to registered mutual funds but often with lower expenses).

This provision is effective for investments after the date of enactment.

Currently, 401(k) plans are permitted to offer hardship distributions from different contribution types, including qualified nonelective employer contributions (QNECs) and earnings on elective deferrals. The Act:

This provision is effective for plan years beginning after December 31, 2023.

403(b) plans were not originally included in the SECURE Act provisions that allowed for the creation of PEPs. The Act provides that 403(b) plans can participate in MEPs and PEPs and provides for relief from the "one bad apple rule" that is similar to the qualified plan rules. The one bad apple rule provides relief for the "bad apple" problem where the qualification of an entire MEP is at risk based on the actions of one participating employer.

This provision is effective for plan years beginning after December 31, 2022.

The Act requires the Secretaries of Labor and the Treasury and the Director of the PBGC to study the effectiveness of disclosure and reporting requirements for plan sponsors and submit a report to Congress within three years of enactment that includes recommendations for simplifying the requirements so that participants and beneficiaries can better understand the information.

Currently, employees who do not participate in defined contribution plans are generally required to receive participant disclosures. The Act amends the requirements under ERISA and the Code to provide that only an annual reminder notice of eligibility is required to be furnished to unenrolled participants during the annual enrollment period. The Act defines an unenrolled participant as an eligible individual who has received a summary plan description and other notices related to plan eligibility.

This provision is effective for plan years beginning after December 31, 2022.

Currently, under ERISA periodic statements must be furnished to participants and beneficiaries. For defined contribution plans this means at least once each quarter if the participant has the right to direct investments and at least once each calendar year for others. Defined benefit plan statements must generally be delivered every three years. The DOL regulations contain safe harbors that allow retirement plans to use electronic media to satisfy ERISA's disclosure obligations.

(See Practice Note, Electronic Disclosure of Retirement Plan Information.)

The Act changes the benefit statement requirement to provide that:

There are exceptions for plans that allow employees to opt into electronic delivery or that follow the 2002 safe harbor.

This provision is effective for plan years beginning after December 31, 2025.

The Act requires defined benefit plan administrators that offer lump sum distribution options within a period of time (i.e., lump sum window) to provide a new disclosure to participants with certain information. The disclosure must be provided to the DOL and PBGC. Plan administrators must also provide a report to the DOL and PBGC on the number of individuals who accepted the lump-sum offer.

The DOL and Treasury Departments are directed to issue implementing regulations within one year of enactment.

The Act amends the information that defined benefit plan administrators must include on the annual funding notice that is provided to plan participants, beneficiaries, and the PBGC. The changes are intended to more clearly identify defined benefit plan funding issues on the notice.

This provision is effective for plan years beginning after December 31, 2023.

Currently, qualified charitable distributions (QCDs) are permitted from IRAs up to $100,000, can be deducted from gross income, and count as RMDs.

The Act:

This provision applies to distributions made in taxable years beginning after the date of enactment.

Currently, catch-up contributions for IRAs for individuals age 50 or over are $1,000 and are not indexed for inflation. The Act indexes catch-up contributions for IRAs for inflation, in $100 increments.

This provision applies to taxable years beginning after December 31, 2023.

Currently, if there is a prohibited transaction in an IRA:

The Act clarifies that if an individual has multiple IRAs, only the IRA that is used in the prohibited transaction is treated as distributed to the individual.

This provision applies to taxable years beginning after the date of enactment.

Currently, SIMPLE IRAs and SEPs are not allowed to have a Roth component. The Act provides that sponsors of SEPs and SIMPLE IRAs may offer employees the ability to treat contributions as Roth contributions.

This provision is effective for taxable years beginning after December 31, 2022.

The Act allows an employer, during the plan year, to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan with mandatory employer contributions.

This provision is effective for plan years beginning after December 31, 2023.

The Act allows sponsors of individual account plans to offer an emergency savings account linked to participants' plan accounts. Non-highly compensated participants can be given the opportunity to contribute to an emergency savings account or the plan sponsor can automatically enroll them (up to three percent of compensation). The portion of the emergency savings account attributable to participant contributions is limited to the lesser of $2,500 or another amount determined by the plan sponsor. Participants can withdraw funds at least once per month.

If the plan sponsor matches participants' elective contributions, it must also match participants' emergency contributions at the same rate. The matching contributions related to the emergency savings contributions must be made to the regular plan account, not the emergency savings account. The matching contributions cannot exceed the amount of the participant's emergency savings contributions (the lesser of $2,500 or the amount designed in the plan document).

This provision applies to plan years beginning after December 31, 2023.

The DOL is directed to create an online lost and found database for benefits owed to missing participants and beneficiaries to help them locate the plan administrator, including contact information, so that they may recover their lost benefits.

The database must be established no later than two years after the date of enactment.

Currently, an agreement entered into before the first day of the month in which compensation is paid or made available is required to defer compensation into any 457(b) plan. The Act changes the rule for governmental 457(b) plans to align with the 401(k) plan rule. In effect the rule now permits participants in governmental 457(b) plans to change their deferral rate at any time before the compensation is available to the individual.

This provision is effective for taxable years beginning after the date of enactment.

Currently, the statute of limitations for excess retirement contributions starts within three years after the tax return is filed but does not begin if there is no return filed. The Act provides that:

This provision is effective on enactment.

The Act makes a number of technical changes to the Code and ERISA rules prohibiting the backloading of benefit accruals as they relate to hybrid plans that credit variable interest.

This provision is effective for plan years beginning after enactment.

Currently, defined benefit plans pay variable rate premiums to the PBGC that equal $52 for each $1,000 of unfunded vested benefits. This amount is indexed for inflation.

Under the Act, the indexing is terminated, and the premium is set at $52 for each $1,000 of unfunded vested benefits.

This provision is effective on enactment.

The Act requires the DOL to review Interpretive Bulletin 95-1 to determine whether it should be amended. Interpretive Bulletin 95-1 clarifies the fiduciary responsibilities of plan sponsors when they purchase annuities to transfer pension risk to insurers.

This provision is effective on enactment.

Current law allows the transfer of excess assets in a defined benefit plan to a retiree health benefits or life insurance account within the plan, but only until December 31, 2025. The Act extends the deadline until December 31, 2032. It also allows de minimis transfers if the transfer is no more than 1.75 percent of plan assets and the plan is at least 110 percent funded.

This provision applies to transfers made after the date of enactment.