The Road to New SECURE Act Retirement Legislation

In today’s day and age, the number of hurtles and challenges a retirement plan fiduciary has to face can be difficult. Various factors are often at play that stretch as high up as IRS and DOL legislation, as well as general elections. At the recent 2022 PLANSPONSOR National Conference in Orlando, Florida, the overall regulatory outlook for the retirement planning industry was discussed by Jodi Epstein, partner at Ivins Phillips & Barker, and David Levine, principal and co-chair of Groom Law Group.

On a positive front, the conversation was largely optimistic regarding the hopeful passing of a new round of federal retirement planning reforms revolving around the SECURE Act (Setting Every Community Up for Retirement Enhancement). Specifically, a lot of focus is directed toward a regulation involving the SECURE Act’s requirement that retirement benefits be made available for certain part-time workers (which, as of today, are defined as workers who have worked between 500 and 999 hours in each of the past three consecutive years). Tracking hours of part-time staffers between the start of 2021 and 2024 will allow plan sponsors to be well set up for compliance when these SECURE Act eligibility rules first take effect, and there will be opportunities for additional clarifying guidance as we continue, according to Levine.

On the other hand, there are other questions and hurtles that remain at-large, regarding the industry’s ability to definitively establish these prior reforms under the SECURE Act, as well as provisions around legislative framework for the new Securing a Strong Retirement Act, often referred to as SUCURE 2.0, and its potential impact on such part-time worker eligibility rules. Levine touched on the fact that there is a lot to unpack regarding SECURE 2.0 and the related bills that are associated, but that the goal is to create new plan features and new levels of access to the retirement plan system that make things better.

The waiting game continues on new legislation, but the optimism has grown increasingly evident, with the House having passed its version of the legislation by a wide margin. According to Epstein, a number of the provisions in the legislative package involve significant bipartisan appeal. However, a closely-divided Congress will have to navigate speed bumps involving certain aspects of the legislation not being budget neutral and potentially having to involve new tax revenues.

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