Important year-end changes affecting employers and their employee benefit plans

While many were out finishing up their last-minute Christmas shopping, Congress passed the highly anticipated retirement plan legislation known as SECURE Act 2.0, and the U.S. Departments of Labor, Health and Human Services, and Treasury issued good-faith relief from the troublesome prescription drug reporting that was otherwise due December 27, 2022. There are too many provisions to cover comprehensively (SECURE Act 2.0, by itself, is hundreds of pages long), but the following provides a summary of various highlights.

New retirement plan laws

SECURE Act 2.0 includes a number of new rules and opportunities for employers and their qualified retirement plans, including:

Increased age for required minimum distributions. The current age at which a qualified retirement plan must start forcing distributions for many participants is age 72. For any individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the new applicable age is 73. For an individual who attains age 74 after December 31, 2032, the applicable age is 75.

Increased catch-up contribution limit for ages 60 to 63. For 2022, participants who were at least 50 years old were able to save an additional $6,500 (on top of the $20,500 limit that applied to all participants). This limit increases to $7,500 for 2023. Starting with the 2025 tax year, SECURE Act 2.0 pushes the limit even further for individuals between the ages of 60 to 63 to the greater of (a) $10,000, or (b) 150% of the regular catch-up amount for 2024.