Since the enactment of the SECURE 2.0 Act of 2022 (the Act or SECURE 2.0), many of the Act's provisions became operationally effective on the enactment date and in successive years. However, plan amendments were not immediately required for many of the provisions of the Act. The general deadline for adopting these amendments is December 31, 2026 (December 31, 2028, for collectively bargained plans and December 31, 2029, for governmental plans). Plan sponsors must ensure that their written plan documents are updated to conform with actual plan operation. Below is a brief recap of the provisions that must be incorporated into plan documents by the deadline.
Key Required Provisions
Plan sponsors should confirm that their plan documents are updated, as applicable, for the following mandatory provisions:
- Required Minimum Distribution (RMD) Age Increase. Plan sponsors must amend plan documents to reflect the age increase to age 73 (and age 75 beginning in 2033).
- Long-Term Part-Time Employee Eligibility Expansion. Plan documents should reflect that long-term part-time employees who are not collectively-bargained generally must be eligible to participate in a 401(k) or 403(b) plan once they have (i) reached age 21 and (ii) worked at least 500 hours in three consecutive 12-month periods beginning in 2021. SECURE 2.0 reduced the service requirement from three consecutive years to two years (effective for plan years beginning after December 31, 2024). Therefore, long-term part-time employees became eligible to contribute to their retirement plans on January 1, 2025.
- Automatic Enrollment for New Plans. For 401(k) and 403(b) plans established after December 29, 2022, plan documents must include automatic enrollment and escalation features (subject to statutory exceptions. See our previous client alert, which can be accessed here, for a complete list of exceptions).
- Catch-Up Contributions (Roth Requirement for High Earners). Beginning January 1, 2026, catch-up contributions for "high earners" must be made on a Roth basis. Roth treatment of catch-up contributions is limited to those participants whose wages exceed $150,000 (indexed annually) in the prior year.
- Surviving Spouse Election To Be Treated As Employee. Beginning January 1, 2024, a surviving spouse of a deceased participant may elect to be treated as the deceased participant for the purposes of determining RMDs.
- Reduced Excise Tax on Certain Amounts. The excise tax imposed on an individual on the amount distributed to the individual that is less than the required RMD for the year is reduced to 25 percent of the shortfall. The Act further reduces the excise tax to 10 percent if the shortfall is corrected during a two-year correction window.
- Roth Accounts Not Subject to RMDs. Starting in 2024, RMDs are no longer required from Roth accounts in employer retirement plans. However, Roth accounts are still included in 2023 RMDs that were paid in 2024.
- Surviving Spouse Election to be Treated As Employee. A spousal beneficiary may irrevocably elect to be treated as the employee for RMD purposes and if the spouse is the employee's sole designated beneficiary. The applicable distribution period after the participant's year of death is determined under the uniform life table.
- Paper Statement Requirement. For plan years beginning after December 31, 2025, the plan must provide at least one quarterly statement in paper form annually for defined contribution plans unless the participant elects otherwise. The other three quarterly statements may be provided electronically, but the participant must be able to elect paper statements. For a defined benefit plan, at least one statement must be provided on paper every three years.
Discretionary Amendments
In addition to required changes, many SECURE 2.0 provisions are optional. To the extent a plan sponsor has implemented (or intends to implement) discretionary features – such as expanded hardship withdrawals, increased cash-out limits, or Roth treatment of employer contributions – those features must also be formally documented by the amendment deadline.
Operational Compliance is Critical
The Internal Revenue Service (IRS) expects plans to operate in compliance with SECURE 2.0 provisions in advance of the formal amendment deadline. Any gap between operations and written terms should be identified and corrected promptly by December 31, 2026, to avoid qualification issues. In addition, participant communications should be carefully crafted to ensure employees understand their rights and responsibilities under the Act.
Next Steps
To ensure timely compliance with the deadline, we recommend that plan sponsors:
- Conduct a gap analysis comparing current plan operations to existing plan documents.
- Identify all required and discretionary SECURE 2.0 provisions applicable to the plan.
- Coordinate with recordkeepers and document providers on amendment preparation.
- Adopt all necessary amendments as soon as possible, but no later than December 31, 2026.
Our team is available to assist with compliance reviews, amendment drafting, and implementation strategy. We will continue to monitor the IRS and Department of Labor (DOL) for further issuance of clarifying guidance, potential delays in implementation, and model plan amendments. For guidance or assistance, please contact E. Rena Felton or a member of Baker Donelson's Tax Group.