What Public Pensions Should Know About the Latest SECURE Act 2.0 Guidance
On December 20, the U.S. Treasury Department and the Internal Revenue Service released its initial miscellaneous or “grab bag” guidance on the SECURE Act 2.0.
By: Tony Roda, Williams & Jensen
On December 20, the U.S. Treasury Department and the Internal Revenue Service released its initial miscellaneous or “grab bag” guidance on the SECURE Act 2.0. There are over 90 provisions in SECURE 2.0 and collectively they touch on almost all parts of U.S. tax law related to retirement and pension plans and their plan participants. This first round of grab bag guidance addresses provisions that are either effective already or will take effect soon.
The link to the December Treasury Notice 2024-2 can be found here https://www.irs.gov/pub/irs-drop/n-24-02.pdf
As you will see, this first tranche of miscellaneous guidance does not address the provisions of SECURE 2.0 in which the public sector plans have been most interested, e.g., recoupment of overpayments, Roth catch up mandate (see discussion below about previous guidance on this provision), the new first responder provisions, and student loan repayments. Treasury and IRS may address these areas in future guidance. However, it is important to note that on page 61 (also footnote 17) of Treasury Notice 2024-2 governmental plans now have an extended deadline of December 31, 2029, to make plan amendments.
Earlier this year, Treasury-IRS issued guidance specific to the required minimum distribution (RMDs) provisions of SECURE 2.0. The RMD guidance can be found in Treasury Notice 2023-54. In addition, Treasury Notice 2023-62, which was released in August, provides initial guidance on the new Roth catch up contribution requirement that applies to employees who participate in 401(k), 403(b) or governmental 457(b) plans and whose prior-year Social Security wages exceeded $145,000. In welcome news contained in that Notice, Treasury created a two-year administrative transition period to provide breathing room for retirement systems to implement the new law, which was originally set to take effect on January 1, 2024.
Please be assured that NCPERS will continue to monitor closely any developments related to the implementation of the SECURE Act 2.0. Our members will be hearing directly from House and Senate tax counsels on many of these topics at the NCPERS Legislative Conference in Washington, D.C. in January.
Tony Roda is a partner at the Washington, D.C. law and lobbying firm Williams & Jensen, where he specializes in legislative, regulatory, and fiduciary matters affecting state and local pension plans. He represents the National Conference on Public Employee Retirement Systems and state-wide, county, and municipal pension plans in California, Colorado, Georgia, Kentucky, Ohio, Tennessee, and Texas. He has an undergraduate degree in government and politics from the University of Maryland, J.D. from the Catholic University of America, and LL.M (tax law) from the Georgetown University Law Center.