Retirement Savings Plans,For Individuals,For Plan Sponsors,Custom

SECURE 2.0 Technical Corrections Legislation Expected in Congress

June 15, 2023

A bipartisan coalition of congressional leaders say they intend to introduce new legislation clarifying several SECURE 2.0 provisions in a letter directed to the U.S. Department of the Treasury and the IRS.

While the Roth catch-up challenges require alternate legislation, proposed technical corrections would “correct erroneous statutory language” to ensure “that the provisions carry out Congressional intent,” according to a letter signed by Senators. Mike Crapo (R-ID) and Ron Wyden (D-OR), chair and ranking member, respectively, of the Senate Finance Committee, as well as Representatives Jason Smith (R-MO) and Richard Neal (D-MA), chair and ranking member, respectively, of the House Ways and Means Committee.

While MissionSquare expects the new legislation to be formally proposed in September, several of the provisions identified would need to be in place before the start of next year to ensure plan participants don’t lose out on important retirement savings tools.

The letter includes top MissionSquare and industry priorities needing clarification:

  • Catch-up contributions: There was no congressional intent to eliminate all catch-up contributions for 2024. The letter states that Congress’s intent was to “require catch-up contributions for participants whose wages from the employer sponsoring the plan exceeded $145,000 for the preceding year to be made on a Roth basis and to permit other participants to make catch-up contributions on either a pre-tax or a Roth basis.”
  • RMD age raise in 2033: The intent was to increase the required minimum distribution age to age 75 for individuals who turn 73* after 2032 (not for individuals who turn 74 after 2032).
  • Roth IRA limits: There was no intent to have SIMPLE and SEP contributions reduce the Roth IRA contribution limit.
  • Startup credits: SECURE 2.0 increased the regular small business startup credit and also created a new startup credit based on employer contributions. Congress’s intent was for the new contribution-based startup credit to be separate from the regular credit and not to be subject to the limits applicable to the regular credit.

The letter states that the signatories “intend to introduce technical corrections legislation to correct erroneous statutory language, which may include items not addressed in this letter, so that the provisions carry out Congressional intent.” The purpose of the letter is to provide Treasury and the IRS with a basis to make a formal announcement that they will enforce the laws in accordance with congressional intent with respect to the four issues identified. We are hoping to see that guidance soon.

There will be many more technical corrections to SECURE 2.0 than are referenced in the congressional letter. The four were identified as critically important to be clarified as soon as possible. MissionSquare hopes that this letter and an anticipated Treasury/IRS announcement will relieve the timing pressure.

For more information on these corrections or other retirement policy issues, contact Erica McFarquhar, Deputy General Counsel, or Irica Solomon, Head of Government Affairs.

* Age 70½ (if you were born before July 1, 1949), age 72 (if you were born after June 30, 1949, and before January 1, 1951), or age 73 (if you were born after December 31, 1950).

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