IRS Guidance on SECURE 2.0


Given the massive scale (and page count) of SECURE 2.0, it may come as a relief to all the retirement plan sponsors scurrying toward comprehension and compliance that the IRS has begun issuing Q &A guidance on the law’s key provisions. The first, Notice 2024-02 is a mere 81 pages. Read on for a snapshot of what’s addressed.

Questions and Answers: SECURE 2.0 Via The IRS

While not to be taken as a comprehensive “how to” for implementing 2022’s SECURE 2.0 Act, the Questions and Answers in IRS Notice 2024-02 are certainly a good place to start as  many of the SECURE 2.0 provisions become effective in the year ahead. Issues addressed by the IRS relate to the following parts of SECURE 2.0:

  • Expanding automatic enrollment in retirement plans (Section 101)
  • Modification of credit for small employer pension plan startup costs (Section 102)
  • Military spouse retirement plan eligibility credit for small employers (Section 112)
  • Small immediate financial incentives for contributing to a plan (Section 113)
  • Contribution limit for SIMPLE plans (Section 117)
  • Exception to the additional tax on early distributions from qualified plans for individuals with a terminal illness (Section 326)
  • Employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year (Section 332)
  • Cash balance clarifications (Section 348)
  • Safe harbor for correction of employee elective deferral failures (Section 350)
  • Provisions relating to plan amendments (Section 501)
  • SIMPLE and SEP Roth IRAs (Section 601) 
  • Optional treatment of employer contributions or nonelective contributions as Roth contributions (Section 604)

Don’t Forget: Form 5500 and ERISA Bond

Of course Form 5500 must be attended to annually–and this year, plan sponsors are advised to pay extra attention before signing off: incremental changes have turned it into  a “major enforcement and oversight tool.Though preparation of Form 5500 is generally done through service providers, sign off by plan sponsors needs to be taken seriously: “Form 5500 is filed under penalty of perjury  which means that anyone signing should, at a minimum, review the form at a high level to be sure that nothing in the form is obviously inaccurate.”  Failures and shortcomings related to filing Form 5500 come with steep penalties from both the DOL and IRS.

Although some aspects of new and updated compliance protocols are tricky and require attention, here’s one that all plan sponsors can quickly address: maintaining an up to date and adequate ERISA fidelity bond, obtained from a surety listed by the US Department of Treasury. ERISA bonds protect the assets of the retirement plan from theft. To ensure compliance, plan sponsors across the country obtain their ERISA fidelity bonds from leading national provider, Colonial Surety. 

Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered, and makes it possible for plan sponsors to protect themselves by opting into an affordable fiduciary and cyber liability coverage package. Armed with Colonial’s ERISA bond plus liability coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000. $50k of Cyber Liability coverage is included at no extra cost. Protect yourself and your business for a few dollars a day, now: 

ERISA Fidelity Bond Plus Fiduciary and Cyber Liability Insurance

Providing customers with knowledgeable and friendly service since 1930, Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.