SECURE ACT attached to 2020 appropriations bill

[RatherBeGolfing]

Expected to be passed by Friday!

https://www.pionline.com/legislation/secure-act-attached-year-end-spending-bill

[RatherBeGolfing]

Text of the bill for those who want to read

 https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR1865SA-RCP116-44.PDF

SECURE language starts on page 1532

 

Some highlights with page numbers:

Retroactive safe harbor election - Page 1555

Repeal of maximum age for IRA contributions - Page 1563

Requirement to allow long term employees working more than 500 hours to participate - Page 1574

Penalty free withdrawals for child birth or adoption - Page 1578

RMD age increased to 72 - Page 1584

Plan adopted by filing due date treated as adopted as of close of the year - Page 1600

Lifetime income disclosure - Page 1603

[mattmc82]

that requirement to allow long term EE working more than 500 hours is going to send sooo many plans into audit status. which is just going to proliferate open mep participation. really disappointed in ASPPA. Am I alone in thinking this bill is just going to kill off TPAs and be a boon for CPAs and large financial institutions? 

[RatherBeGolfing]

7 minutes ago, mattmc82 said:

that requirement to allow long term EE working more than 500 hours is going to send sooo many plans into audit status. which is just going to proliferate open mep participation. really disappointed in ASPPA. Am I alone in thinking this bill is just going to kill off TPAs and be a boon for CPAs and large financial institutions? 

There was no stopping open MEPs, but I still don't see the impact being as big as some think it will be.  They will work for some ERs, but I don't think you will see a huge rush to MEPs.  
I'm not sure what the impact of long term part time employees will be.  Its 500-999 for 3 consecutive years, still have to meet age requirement.  You do not have to include them for nondiscrimination testing or TH.  You don't have to match.  This won't kick in until plan years beginning after 12/31/2020.  

Lots of good stuff in here too, like adopting a plan after the close of the year, retroactive safe harbor

[mattmc82]

i fear the long term thing might kill some plans or make them deferral only. have several with something like 50% of first 5% of match and they struggle to make it each year. audit fees would be more than employer contribution in most cases. i suppose those are the types that will go the open mep route maybe. or they will be pulled from plan assets instead of paid by the company. would have been nice to have $0 balance actives not count towards audit limit included in the bill. my first thoughts with legislation is "how will this help/hurt participants". i just see more cons ultimately for participants with a lot of this.

[RatherBeGolfing]

4 minutes ago, mattmc82 said:

would have been nice to have $0 balance actives not count towards audit limit included in the bill

I agree, but we should be able to get that through guidance.  Clearly the goal is to provide access, not push plans into audit

[Peter Gulia]

If those who become eligible because of soon-to-be amended IRC § 401(k)(2)(D) otherwise would increase a plan’s count of participants to 100 or more, is it feasible for an employer to maintain two or more plans?

 

See Q&A 14 [on pages 17-18]:  https://www.americanbar.org/content/dam/aba/migrated/2011_build/employee_benefits/dol_2009.pdf

 

[RatherBeGolfing]

On 12/17/2019 at 5:39 PM, Peter Gulia said:

If those who become eligible because of soon-to-be amended IRC § 401(k)(2)(D) otherwise would increase a plan’s count of participants to 100 or more, is it feasible for an employer to maintain two or more plans?

 

See Q&A 14 [on pages 17-18]:  https://www.americanbar.org/content/dam/aba/migrated/2011_build/employee_benefits/dol_2009.pdf

 

I don't see why not. 

It should also be pointed out that for Section 112 ,periods beginning before 1/1/2021 are not taken into account, so 2024 will be the first plan year to include one of these participants.

I'm optimistic that we can get regulatory guidance in the meantime to deal with audit issue this creates.