SECURE 2.0 Changes in 2024

SECURE 2.0 Changes in 2024

In December 2022, Congress passed the SECURE 2.0 Act of 2022 (SECURE 2.0) as a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This legislation includes 92 provisions designed to make retirement more accessible and improve retirement outcomes for participants.

Some provisions of SECURE 2.0 have already taken effect, while others will take effect over the next several years. As employers kick off 2024, it is important for retirement plan sponsors to be aware of which provisions took effect at the start of the calendar year, because many of these changes will affect participant contributions, withdrawals and other retirement-related procedures. Plan sponsors may also want to make amendments to their plan based on these updates.

Plan sponsors should take note of the following changes, which took effect on 1/1/2024:

  • Roth requirement for catch-up: Applies to participants whose prior calendar-year FICA wages were more than $145,000 (indexed for inflation).
  • Cash out $5,000 to $7,000: Automatic rollovers, force-outs and QJSA exempt distribution limit changed from $5,000 to $7,000.
  • Student loan matching: Applies to 401(k), 403(b), SIMPLE IRAs and governmental 457(b) plans.
  • Penalty-free distributions in case of domestic abuse: Amount not to exceed lesser of $10,000 (indexed) or 50% of employee's vested account balance.
  • Emergency withdrawals: No 10% early distribution penalty will be assessed on a withdrawal of up to $1,000 before age 59½ when used for emergency expenses, which include unforeseeable or immediate financial needs relating to personal or family emergencies).
  • Emergency savings accounts (ESAs): ESAs must be funded with after-tax contributions and are capped at $2,500 (indexed for inflation). Once cap is reached, additional contributions can be made to Roth account or stopped. Participants must be allowed to take one withdrawal per month.
  • Retroactive amendments: Allows plans to be amended up to tax return due date to increase benefits.
  • Mid-year conversion from SIMPLE to Safe Harbor 401(k): Employers are allowed to replace a SIMPLE IRA with a safe harbor 401(k) plan mid-year.
  • Top-heavy exclusions: Allows a top-heavy plan that covers otherwise excludable employees (who are under 21 and have less than one year of service) to perform separate top-heavy testing for excludable and non-excludable employees.
  • Correction of auto-enroll failures: Makes permanent the Employee Plans Compliance Resolution System (EPCRS) safe harbor for correcting automatic enrollment and/or automatic escalation failures, which was set to expire on 12/31/2023.
  • Family attribution rules: Removes attribution for spouses with separate and unrelated businesses who reside in community property states and between parents with separate and unrelated businesses who have minor children.

SECURE Act 2.0 legislation can help you as a retirement plan sponsor respond to economic uncertainty and the evolving retirement landscape with confidence.



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SECURE 2.0 Changes in 2024https://www.cbiz.com/Portals/0/Images/article_thumbs/2020-Campaign-and-Taxes-thumb_0_0_1835347983.jpg?ver=35aI7Pt1mo1f8UH4SiwREg%3d%3dhttps://www.cbiz.com/Portals/0/Images/article_thumbs/Retirement - SECURE Act_0_650_1136882232.jpg?ver=nYLmuCiC_Y7KMB1hsb8MYQ%3d%3dIn December 2022, Congress passed the SECURE 2.0 Act of 2022 (SECURE 2.0) as a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This legislation includes 92 provisions designed to make retirement more accessible and improve retirement outcomes for participants. 2024-01-05T17:00:00-05:00In December 2022, Congress passed the SECURE 2.0 Act of 2022 (SECURE 2.0) as a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This legislation includes 92 provisions designed to make retirement more accessible and improve retirement outcomes for participants.Regulatory, Compliance, & LegislativeInvestment AdvisoryRetirement Plan ServicesYes