Lawmakers to introduce SECURE 2.0 technical corrections

In a May 23, 2023 letter to the U.S. Department of the Treasury and the IRS, the chairs and ranking members of the Senate Finance and House Ways and Means committees announced they will introduce technical corrections to SECURE 2.0 to ensure its provisions are carried out as Congress intended.^[1]

In the letter, Senate Finance Committee Chair Ron Wyden (D-OR) and ranking member Mike Crapo (R-ID), along with House Ways and Means Committee Chair Jason Smith (R-MO) and ranking member Richard Neal (D-MA), clarified legislative intent relating to the following four provisions in SECURE 2.0:

1. Catch-up contributions: SECURE 2.0 requires that participants whose wages from the sponsoring employer exceeded $145,000 for the preceding year make their catch-up contributions on a Roth basis; however, a conforming change appears to have inadvertently eliminated all catch-up contributions after 2023. The letter indicates that Congress did not intend to eliminate catch-up contributions.
2. Age for minimum required contributions: SECURE 2.0 incrementally increases the required beginning date from age 72 to age 75, but the timing for the increase from age 73 to 75 is not clear. The letter states that the increase from 73 to 75 in 2033 is intended to apply to individuals who turn 73 after 2032 (not individuals who turn 74 after 2032).
3. SEP and SIMPLE IRA Roth contributions: SECURE 2.0 permits SIMPLE IRA plans and SEP plans to include a Roth IRA. The letter indicates that Roth contributions to SEP and SIMPLE IRAs are not intended to count against the individual’s Roth IRA contribution limit.
4. Small employer tax credits: SECURE 2.0 increased the amount of the start-up credit for some employers (from 50% to 100% of administrative costs, capped annually at $5,000) and added a new credit equal to a percentage of employer contributions, capped at $1,000 per employee. The letter clarifies that the new tax credit for employers that make contributions to the plan is intended to be in addition to the start-up tax credit and thus should not count toward the annual $5,000 limit on the start-up tax credit.

With the letter, the lawmakers aim to give Treasury and the IRS the basis for implementing and enforcing these four provisions as intended while waiting for corrective action from Congress.

Footnote

1. For more information on SECURE 2.0, see “SECURE 2.0 signed into law as part of 2023 federal spending package,” Insider, January 2023. Return to article undo

Authors

---

Ann Marie Breheny

Senior Legislative Advisor

email Email phone +1 703 258 7420

---

William “Bill” Kalten

Senior Director, Retirement and Executive Compensation

email Email phone +1 203 326 4625

---

Maria Sarli

U.S. Retirement Resource Actuary

email Email phone +1 404 365 1708

---