Industry News

On March 13, 2023, the Groom Law Group released its alert, Tax-Exempt and Church Plan Highlights from SECURE 2.0. The alert summarizes some of the most significant changes of the SECURE 2.0 Act of 2022 (SECURE 2.0) that will impact tax-exempt entities and church plans.

Among other changes, SECURE 2.0 updated 403(b) plan rules to conform more closely with those of 401(k) plans. The act also provided changes for 457(b) plan rules, of which many will apply only to governmental 457(b) plans.  In addition, SECURE 2.0 made changes for church plans that do not elect to be subject to ERISA, referred to as “Non-Electing Church Plans.” (Note: “Electing Church Plans” are generally treated the same as other qualified plans and were not addressed in the alert.)

The alert covered key changes that are specific to 403(b) plans including provisions related to: 1) multiple employer plans; 2) long-term, part-time workers; 3) enhanced 403(b) plans; and 4) hardship withdrawal rules. It also summarized some other key changes for tax-exempt plans and church plans including: 1) increase in the Required Minimum Distributions (RMDs) age; 2) increase in the catch-up contribution limits; 3) recovery of plan overpayments; and 4) expansion of employee plans compliance resolution system.

Groom Law cautions that, “Many SECURE 2.0 changes are highly technical and complex, and will likely require more guidance before they can be implemented. Churches and tax-exempt entities will want to consider the impact of these changes on their retirement plans.”

The alert is available here.