Many employers continue to have questions relating to new retirement plan legislation known as SECURE 2.0.
Most urgently, retirement plan administrators are anxiously awaiting IRS guidance relating to new catch-up contribution rules slated to be effective January 1, 2024.
Meanwhile, other aspects of SECURE 2.0 regulation continue apace.
For example, for plan sponsors working to update their required minimum distribution (RMD) procedures for SECURE 2.0, the IRS recently issued transition relief.
SECURE 2.0 made a number of changes, including increasing the age for RMDs to 73 (from 72) beginning January 1, 2023.
IRS Notice 2023-54 provides for certain transition relief from this requirement, including:
- Providing that plan sponsors will not be deemed to have violated applicable law if they treated certain distributions as eligible rollover distributions. This relief applies to distributions made between January 1, 2023 and July 31, 2023 to a participant born in 1951 (or a surviving spouse) that would have been an RMD but for the change under SECURE 2.0.
- Any distribution described above is also eligible for an extended deadline for rollover until September 30, 2023.
- Final regulations regarding RMDs will apply for calendar years beginning no earlier than 2024.
Plan sponsors should speak with ERISA counsel to ensure that their plan document and administrative procedures are being appropriately updated for SECURE 2.0 changes.
A copy of the notice is available here: N-2023-54