The SECURE 2.0 Act and the Rothification of
Defined Contribution Plans: Part II
Domenique DiSilvio [00:00:12.209 --> 00:00:19.889] Hello, everyone. Today we'll talk about provisions of the SECURE Act that deal with Roth contributions.
Domenique DiSilvio [00:00:20.304 --> 00:00:34.734] First, the act allows, but does not require, plans to offer the choice to treat all or a portion of matching and employer nonelective contributions as Roth contributions
Domenique DiSilvio [00:00:35.034 --> 00:00:39.474] as long as the participant is 100% vested at the time the contributions
Domenique DiSilvio [00:00:40.334 --> 00:00:53.534] are made. This provision is already effective, but there are a lot of things for plan sponsors to consider before offering this choice to their plan participants. Plan sponsors,
Domenique DiSilvio [00:00:53.534 --> 00:00:59.864] their record keepers and their payroll providers will be required to make both systems and
Domenique DiSilvio [00:00:59.889 --> 00:01:03.630] procedural changes in order to offer the new choice.
Domenique DiSilvio [00:01:03.630 --> 00:01:18.510] Plan sponsors will also need to establish procedures for communicating this to their plan participants, for collecting their elections back, and for reporting the Roth contributions as taxable income.
Domenique DiSilvio [00:01:18.510 --> 00:01:32.790] You might be wondering how participants might receive the news of this new provision. We think that because participants are simply being offered a choice here as to when their income will be taxable.
Domenique DiSilvio [00:01:32.790 --> 00:01:37.830] that they'll be fine with this new choice, and that they'll appreciate the flexibility.
Domenique DiSilvio [00:01:37.830 --> 00:01:47.790] The last provision that I want to talk about is the elimination of the required minimum distribution for Roth contributions.
Domenique DiSilvio [00:01:48.115 --> 00:02:01.825] In 2024, participants will no longer be required to distribute their Roth contributions as part of their required minimum distribution. If you think about it this makes perfect sense.
Domenique DiSilvio [00:02:03.870 --> 00:02:12.870] Taxes on those dollars have already been paid so there's no incentive for the IRS to require that those distributions be made.
Domenique DiSilvio [00:02:12.870 --> 00:02:15.900] Thank you for joining us today.