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SECURE ACT – Defined Benefit Plans

The Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE” Act) has broad implications for retirement plans.   Although the Act’s primary focus is on defined contribution plans, several provisions of the Act and its sister legislation apply only to defined benefit plans.

This is the fourth in a series of articles describing key provisions of the legislation.  Our focus in this article is on the provisions applicable to defined benefit plans – in-service withdrawals, required minimum distributions, and nondiscrimination testing relief.

SECURE Act – Broad Implications for Retirement Plans

On December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act, 2020, which includes the Setting Every Community Up for Retirement Enhancement Act (the “SECURE” Act). The SECURE Act amounts to the most significant retirement legislation in more than a decade.  Our focus in this article is on the legislation’s effect on retirement plans generally, including provisions broadly applicable to defined contribution, defined benefit, 401(k), 403(b), and certain 457(b) plans.

SECURE Act Generates Changes and Opportunities for Retirement Plans

In the waning days of 2019, President Trump signed into law the most significant retirement legislation in more than a decade.  The Setting Every Community Up for Retirement Enhancement – or “SECURE” – Act includes far-reaching changes that affect qualified retirement plans, 403(b) and 457(b) plans, IRAs, and other employee benefits.  In a series of articles, we will describe key provisions of the Act.  Our first article provides an overview of the Act’s key provisions and their effective dates.  Some of the changes under the SECURE Act are effective immediately, while others are effective for plan or tax years beginning on or after January 1, 2020.  Although the Act generally provides sufficient time to amend plan documents, employers must modify certain aspects of plan administration (and potentially financial planning decisions) now to align with the SECURE Act’s more immediate requirements.

Department of Labor Proposes New Safe Harbor for Electronic Disclosures

The U.S. Department of Labor (DOL) has proposed a  new “safe harbor” rule to allow retirement plan disclosures to be posted online (assuming certain notice requirements are satisfied) to reduce printing and mailing expenses for plan sponsors and to make the disclosures more readily accessible and useful for plan participants.

IRS Finalizes Hardship Distribution Rules

The IRS has issued final regulations modifying and clarifying the rules for in-service hardship distributions from 401(k) and 403(b) plans.  The final regulations are substantially similar to the proposed regulations issued in November of 2018, but they contain a few changes of which plan sponsors should be aware.

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