In a major victory for the advocacy efforts of the American Retirement Association, the most comprehensive retirement savings policy bill since the Pension Protection Act of 2006 was signed by President Trump on December 20. Years in the making, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was included in the Further Consolidated Appropriations Act, 2020, one of the two “minibus” appropriations bills Congress was considering to fund the federal government for the rest of the 2020 fiscal year. The federal government’s fiscal year for 2020 began October 1 and Congress had a December 20 deadline to approve the spending bill to avert another government shutdown. For a pdf summary of the provisions, click here.
Remedial Amendment Period Key
All 29 provisions that are in the original House-passed version of the legislation were included in this bill. The only new provision added was language providing for a remedial plan amendment period until the 2022 plan year (2024 plan year for certain governmental plans), or a later date if the Treasury Department provides one, for any plan amendment required under the SECURE Act and its accompanying regulations. The remedial plan amendment language is critical because many of the SECURE Act provisions (everything but open MEPs and provisions affecting long-term, part-time employees) become effective as of January 1, 2020. The American Retirement Association strongly advocated for the inclusion of such a remedial amendment period to help smooth compliance with the new law.
The SECURE Act is geared toward addressing the real challenges that small business owners face – including costs, administrative burdens and increased liability for mistakes – when they weigh the decision to provide retirement benefits for their workers. To that end, the SECURE Act allows for unrelated employers to join a pooled employer plan, significantly increases the small employer pension plan startup tax credit up to $5,000, and gives business owners more flexibility to help guide their decision-making.
The legislation also:
- simplifies the 401(k) safe harbor rules
- expands portability of lifetime income options
- allows long-term, part-time workers to participate in 401(k) plans
- allows plans adopting by the filing due date to be treated as in effect as of the close of the year
- provides a fiduciary safe harbor for selection of a lifetime income provider
- modifies the treatment of custodial accounts on termination of 403(b) plans
- extends the current required minimum distribution requirements to age 72
- requires disclosures regarding lifetime income
- modifies the nondiscrimination rules to protect longer-service participants