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Education | Mar 07, 2023

What does SECURE Act 2.0 mean for me as a plan sponsor?

Loraine Montanye


As most of the financial, law, human resources, and benefits worlds know, SECURE Act 2.0, a collection of provisions that introduced major changes to the retirement plan landscape, was signed into law on December 29th, 2022, as part of the Fiscal Year 2023 Omnibus Appropriations Bill.

Since then, myriad sources have summarized select provisions and published lists of “key” provisions. Our firm has a summary available here for those who are interested. The drawback of relying on an abridged list is that provisions that the author doesn’t believe are “key” enough to include might, in fact, be relevant to your business.

Additionally, while it is critical to be informed, it is equally important to understand what SECURE Act 2.0’s passage means for your company retirement plan and what to do with that information.

Fortunately, plan sponsors do not have to go it alone in deciphering the Act’s application. They can lean on their retirement plan advisors to help them map out the big picture, analyze the information, and make decisions.

The Big Picture

SECURE Act 2.0 contains 92 provisions, but out of these, only a few will apply to a given employer’s retirement plan. Even fewer invite direct action from you in your capacity as a plan sponsor. In fact, only 35 of the provisions might represent action for sponsors of non-government plans. Of these 35 provisions that might be actionable, 24 present options for sponsors, 9 are mandatory for sponsors to take action to comply with, and 2 have both optional and mandatory elements. Additionally, these numbers are inclusive of a variety of plan types—different provisions are written for different plan types. This means that when you and your retirement plan advisor review the Act together, you may find the list of applicable provisions to be shorter than you expect.

While the number of provisions for sponsors to consider is less than a cursory look at the entire act would suggest, the timeline is also important. Of the 35 provisions that might involve direct sponsor action, only 3 mandatory provisions are in effect this year:


No. 301

Allows plan sponsors who overpay benefits to retirees to choose not to recoup payments. Also places limitations on the time and amount a sponsor may recoup

No. 339

Recognition of tribal government domestic relations orders
No.   345   
Plans   filing under a Group of Plans need only to submit an audit opinion if the   individual participating plan has 100 participants or more   

Note: more of the Act’s mandatory provisions are currently in effect, but this list only includes those which require direct involvement in a strict sponsorship capacity. Sections that place the burden of action on administrators, recordkeepers, payroll, actuaries, and other parties were not included.

As more mandatory provisions go into effect, you will notice that many are operational in nature and will not require plan amendments. For the mandatory provisions that do require amendments, plan fiduciaries and administrators need only comply as they become effective—they will not need to amend the plan until the end of 2025.

Finally, plan sponsors should keep in mind that although legislation has passed, the Department of Labor and the IRS are still working together to write the regulations that will grant structure to the provisions described in the Act.

In accounting for the limited scope of what will actually apply to a given plan, the Act’s lengthy implementation timeline, and the absence of current regulation, the big picture is this: the current burden on plan sponsors for compliance with SECURE Act 2.0 is not only manageable, but there is likely nothing you absolutely must do at this point in time.

Your retirement plan advisor will be able to coordinate with your plan’s full team of service providers to make sure you’re informed and ready when the time for action comes.

Analyze the Information

Once sponsors become comfortable with the parts of the Act that they should be monitoring, they will want to understand what options are desirable for their plan. In order to do this, you and your retirement plan advisor will want to review your plan documents and participant demographics.

When reviewing your plan documents, you’ll remember that many of the provisions laid out in the Act are only operational in nature. For example, No. 338, which defines minimum paper statement frequency, has nothing to do with plan design and is to be complied with (in this case by your recordkeeper and administrator) but does not require an amendment.

You will identify other areas, however, where there is opportunity for change. The most important information to pull from your plan documents at this early stage of the process is going to be your plan’s rules about Roth deferrals. If your plan allows Roth deferrals, the SECURE Act 2.0 provisions that may apply to you and your participants include:


No. 326

Eliminates RMD requirement for amounts held in Roth accounts in employer plans (begins 2024)

No. 603

Catch-up contributions made by employees with compensation of more than $145,000 must be omestic relations orders
No.   604   
Plans are permitted to allow employees to elect whether they would like to receive employer contributions as Roth or Pre-Tax (begins 2023)   

If your plan does not allow for Roth deferrals, then you will need to make a decision this year about No. 603, which mandates Roth treatment of catch-up contributions for employees whose compensation is more than $145,000. As the law is written right now, plans that do not allow for Roth deferrals will either have to amend their plans to allow them, or they cannot accept catch-up contributions for any employees, beginning in 2024, regardless of compensation levels. Your retirement plan advisor can work with you to help you decide.

Analyzing demographic information about your plan participants will also help drive your decisions in choosing which options will benefit both your employee population and your business’s objectives. Some of the information that you and your advisor can review includes:

  • Ages of eligible participants
  • Education levels
  • Compensation
  • Hours worked
  • Terminated participants with vested balances in the plan
  • Retirement-age terminated participants with assets in the plan
  • Number of outstanding loans (if permitted by the plan)
  • Eligible employees who do not participate

Your advisor may have already gathered much of this information from your recordkeeper, but you may also want to consider sending along payroll information such as annual compensation and hours worked, as not all recordkeeping systems track these metrics.

By understanding how your plan is currently designed and by reviewing demographics of the employees who it benefits, you will be ready to choose which options will benefit both your employee population and your business’s objectives.

Make Decisions

Once you understand the big picture of what applies to your plan, the details of how your plan works, and who among your employees may be affected, you as a sponsor can begin to make decisions. Remember, out of SECURE Act 2.0’s 92 provisions, you will only need to make decisions about 26 or fewer, and you generally have a lot of time to do so.

For those who are interested, at the top of this page, you can find a link to a list of the provisions that you may want to make decisions about, listed in the order in which they become effective.

For plan sponsors, the bottom line for SECURE Act 2.0 is this: while the Act is comprehensive in its content, the level of action involved in complying with the act is manageable. A systematic approach that narrows the scope of review, accounts for the specifics of your unique plan and participants, and bases decision-making on the facts will be sure to keep your plan optimized to the benefit of your employees and business. With the help of a retirement plan advisor and a team of experts, sponsors can feel confident in their ability to understand SECURE Act 2.0 and apply it to their organization’s retirement plan.

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

Loraine Montanye


Senior Retirement Plan Advisor

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