As a part of the Consolidated Appropriations Act of 2023, the Setting Every Community Up for Retirement Enhancement Act 2.0 of 2022 (SECURE 2.0) was signed into law on December 29, 2022. A short description of key provisions within the SECURE 2.0 can be found below. Except as otherwise noted below, most provisions of the Act become effective for plan years beginning after December 31, 2024. Plan amendments necessary to comply with this act generally do not need to be made until the 2025 plan year. 

What You Should Know

Expanded Coverage and Increased Savings:

  • Modifies the Saver’s Credit program from a credit paid in cash as part of a tax refund into a direct federal matching contribution to the taxpayer’s individual retirement account (IRA) or eligible retirement plan. (Effective for tax years beginning after December 31, 2026) The match is targeted at low to moderate income households below an income threshold and is treated as a pre-tax contribution to the recipient’s plan or IRA. Additionally, the U.S. Treasury is required to take steps to increase public awareness of the new Saver’s Credit and report to Congress no later than July 1, 2026.
  • Requires new plans to automatically enroll employees and escalate participants’ deferral percentage unless an employee opts out. Employees may be automatically enrolled at a contribution percentage of between 3% and 10% and on the first day of each year following completion of one year of service their contribution must automatically increase by 1% until the contribution reaches at least 10% (but not more than 15%). (Effective for plan years beginning after December 31, 2024)
  • Increases annual catch-up contribution limit for participants who reach ages 60-63 during the plan year to the greater of $10,000 or 150% of the regular catch-up amount that applies to participants who are at least age 50. (Effective for plan years beginning after December 31, 2024)
  • Requires catch-up contributions for participants earning more than $145,000 in the prior calendar year (from the employer sponsoring the plan) to be Roth contributions. (Effective for the plan year beginning after December 31, 2023)
  • Provides plan sponsors with the ability to offer participants the option to elect to have their matching contributions characterized as Roth contributions if they are fully vested at the time they are made.
  • Allows plan sponsors to make matching contributions to employees who make qualified student loan payments, aiming to make it easier for participants who are paying off student debt instead of making retirement plan contributions. These amounts will be treated as regular matching contributions for purposes of discrimination testing. (Effective for plan years beginning after 2023)
  • Allows plan sponsors to develop emergency savings accounts for certain participants to make Roth contributions to a special account within the plan. Participants’ contributions to the emergency savings account must be eligible for matching contributions at the rate established for elective deferrals and balances (not exceeding $2,500) must be eligible for distribution once per month. (Effective for plan years beginning after December 31, 2023)
  • Loosens restrictions on providing incentives (other than matching contributions) that are contingent on the employee making contributions to a retirement plan. Plan sponsors may offer “de minimis financial incentives” that are not paid for by plan assets. (Effective for plan years after the date of enactment)
  • Enhances investment options available to 403(b) plans to include access to collective investment trusts. This change is effective as of the date of enactment, but is dependent on the U.S. Securities & Exchange Commission resolving securities law issues that can prohibit such investments.  
  • Expands the availability of Qualified Longevity Annuity Contracts (QLACs) by removing the limit on the percentage of a participant’s account that can be used to purchase QLACs (previously 25%) and increasing the dollar amount limit to $200,000 from $145,000. (Effective after the date of enactment)
  • Improves coverage for long-term part-time employees by requiring employees who have a minimum of 500 hours of service in two consecutive years (previously three consecutive years) to be permitted to make elective deferrals to an employer’s 401(k) plan (with no requirement for an employer to provide matching or other employer contributions). (Effective for plan years beginning after December 31, 2024)

Provisions Changing Plan Distribution Rules:

  • Increases the required minimum distribution age from 72 to 73 beginning January 1, 2023. The age will further increase to 75 on January 1, 2033.
  • Eliminates pre-death required minimum distributions for Roth amounts. (Effective for plan years beginning after December 31, 2023)
  • Permits plan participants one emergency expense withdrawal of up to $1,000 per year for certain emergency expenses without the 10% tax on early distributions and the opportunity to repay within three years. (Effective for withdrawals made after December 31, 2023)
  • Allows plans to automatically cash out plan benefits of less than $7,000 (previously $5,000) if they are rolled over to a default IRA, unless the participant elects otherwise. This provision also allows plans and recordkeepers to offer automatic portability, enabling amounts transferred to a default IRA to be automatically transferred to the retirement plan of the individual’s new employer (Effective for distributions after December 31, 2023)
  • Eliminates required minimum distribution rule barriers to certain lifetime income annuity features.
  • Introduces penalty-free withdrawals for cases of domestic abuse, participants with terminal illnesses and participants experiencing a qualified federal disaster.
  • Allows plans to accept a participant’s self-certification for hardship events where the participant is eligible for a hardship withdrawal. 

Additional provisions and clarification of plan rules include:

  • Allows defined contribution plans to provide participants with the option of receiving employer matching or nonelective contributions on a Roth basis. (Effective upon enactment)
  • Provides statutory discretion regarding recoupment of overpayments from participants to retirement plan fiduciaries.  
  • Reduces the excise tax for required minimum distributions failures to 25% (previously 50%).
  • Broadens ability of retirement plans to self-correct specific failures through the IRS correction program EPCRS.
  • Creates a searchable online database acting as a retirement savings lost and found for participants.
  • Eliminates requirement for plans to notify employees who have not elected to enroll (automatic enrollment will be required).
  • Increases amount of tax credits sponsors with 50 or fewer employees may qualify for and offers a new tax credit for contributions made by small employers to a newly established retirement plan. The new tax credit is a percentage of the amount contributed by the plan sponsor for participants up to a per-participant cap of $1,000. (Effective for 2023)
  • Requires the issuing of a paper statement for participants once per year unless the plan follows the Department of Labor’s electronic delivery rules or participant requests statements be provided electronically. (Effective December 31, 2025)

Ready to Help

For more information, please reach out to your PNC representative.


Source: Setting Every Community Up for Retirement Enhancement Act 2.0 of 2022 (SECURE 2.0).

Source: SECURE ACT 2.0: Congress Delivers Retirement Plan Legislation and Holiday Cheer as Part of Year-End Spending Bill, Morgan Lewis, December 27, 2022.