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Guidance still needed on implementation of SECURE Act 2.0
Written on Mar 16, 2023
By Jessica Salerno-Shumaker, OSCPA senior content manager
The SECURE Act 2.0 is major retirement legislation, but questions remain for auditors on putting the law into practice.
“We have a law that has been put in place, and it's operationally there, but all the practical aspects of it are not well known yet,” said John Lucas, management consulting at USI Consulting Group. “We don’t know how recordkeepers are going to deal with it.”
Lucas will present at the Employee Benefit Plan Audit Conference on April 28, covering the “Retirement Legislative and Economic Update” general session. At the end of 2022, the Consolidated Appropriations Act of 2023, which was part of the larger Securing a Strong Retirement Act, became law. This is referred to as the SECURE Act 2.0 because it is making changes to existing rules around retirement accounts.
Lucas said he expects to receive questions about the SECURE Act’s auto-enrollment requirement for new 401(k) plans. He said many media outlets reporting this information are creating confusion because they don’t specify that only new plans are impacted by this change.
Other topics to cover include minimum distribution rules, early withdrawal penalties and operational aspects of plans. Lucas said there are also some areas that will remain unclear until further guidance is issued.
“Employees might have the option to elect to have their contribution put in the form of a Roth contribution,” he said. “Which means you pay taxes on the front end, but don't have to pay taxes on the earnings on the back end. But honestly, even though that law has changed and is in effect now, we don't know how recordkeepers are going to be able to do this.”
While this change in legislation is exciting, Lucas said practitioners need to be patient as guidance continues to come from the IRS.
“No one has all the answers yet,” he said. “There are still a lot of things that are going to be clarified.”