Compliance News | July 25, 2022
The retirement reform bill provisions that are referred to as SECURE 2.0 would make numerous changes. This insight covers various changes that would be significant to midsize and large retirement plans, including changes to the required minimum distribution (RMD) rules and to the IRS’s administrative correction program.
The SECURE 2.0 bills include provisions that would:
Under the Employee Plan Corrections Resolution System (EPCRS), the IRS allows a plan that violates the tax qualification rules to correct by self-correction, by submitting an acceptable correction under the voluntary compliance program (VCP) or by entering into a closing agreement with the IRS.
Changes being proposed to EPCRS include the following:
These provisions address significant issues:
Plan sponsors may also be interested in these provisions:
Members of Congress are expected to negotiate a bicameral, bipartisan version for passage in the House and Senate. That version could include provisions that are in none of the bills currently and revisions to the existing proposed changes. Enactment is not likely until after the November election.
Because retirement bills rarely are brought up for a vote by themselves, if SECURE 2.0 moves forward, it is likely it will be added to an end-of-year “must-pass” bill. This could be the appropriations bill, a tax bill or some other “must-pass” bill.
The three SECURE 2.0 bills are:
There are numerous provisions in these three bills, some identical, some with minor modifications and some with no parallel.
These provisions continue the work done by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which is why SECURE 2.0 is shorthand that many retirement industry professionals use to describe the provisions. (We discussed the SECURE Act in our March 4, 2020 insight.)
We discuss more SECURE 2.0 provisions in other July 25, 2022 insights: “SECURE 2.0 Retirement Reform: Focus on DC Plan Provisions” and “SECURE 2.0 Provisions that Would Affect DB Plans.” The second insight covers some provisions that would apply to both DB and DC plans.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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