Long-Awaited Secure 2.0 RMD Guidance, and More, Expected This Year

Should we expect to see more Secure 2.0 guidance from Labor?

Yes. First, note that Labor also has recently issued proposed rules on the Secure 2.0 auto-portability provisions relating to the new automatic roll-ins from a former employer’s plan to a new employer’s plan on behalf of job-changing participants.

And at some point, important guidance will be forthcoming from all three agencies — Treasury/IRS, Labor and PBGC — in response to private-sector input they have just jointly requested on “consolidating, simplifying, standardizing, and improving” reporting and disclosures, as required under Secure 2.0.

The goal is essentially to make disclosures more effective while reducing compliance burdens.

Labor is also counseling with IRS and Treasury as it prepares to collect data from plans and others in order to stand up an online Lost & Found facility by year end to help individuals locate and keep track of their retirement benefits.

Look for more guidance on a variety of other 2.0 issues, including Labor’s statutorily required report on Interpretive Bulletin 95-1 (largely focused on defined benefit pension risk transfers and fiduciary responsibilities regarding selection of DB plan annuity contract providers).

Labor also is expected to be issuing guidance on prohibited transaction procedures, QPAMs [qualified professional asset managers], abandoned plans, and adequate consideration for ESOPs [employee stock ownership plans].

And from Treasury and IRS?

At Treasury and IRS, look for guidance on employer matching of qualified student loan payments, which took effect last month. (IRS and Treasury love acronyms, so student loans are “QSLPs.”)

This is the provision that permits 401(k) plan sponsors to treat student loan repayments as if they were elective deferrals for purposes of providing employer matching contributions. In addition, forthcoming guidance on other Secure 2.0 issues is expected to add to the recent Treasury/IRS and Labor Department answers to questions regarding pension-linked emergency saving accounts.

Eventually, later this year, we expect to be seeing final regulations on required minimum distributions, guidance on standardization and streamlining of rollovers (model standard forms to be developed by Treasury/IRS with extensive industry input), on open questions regarding the required Rothification of catch-up contributions, on whether entities other than plan sponsors might participate in providing the small (up to $250) new out-of-plan taxable incentives to participate in a 401(k), and on other Secure 2.0 provisions.

Discussions also are ongoing at Treasury and IRS and with stakeholders on how to implement the new matching deposits under the expanded saver’s credit/match for lower- and moderate-income plan participants and IRA contributors, especially since Secure 2.0 prohibits the match from being deposited in a Roth account.