Upcoming SECURE 2.0 Amendment Deadline: Has Your Plan Been Amended?

The SECURE 2.0 Act of 2022 (SECURE 2.0) introduced many required and optional changes affecting defined contribution plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. Some of these changes have been in effect and in operation for years, but most plan sponsors have delayed amending plan document terms to reflect the changes. For plans other than collectively bargained and governmental plans, a plan amendment reflecting the changes discussed in this article must be adopted by December 31, 2026, to remain compliant.

Mandatory and Commonly Implemented Provisions

• Required Minimum Distribution Age. SECURE 2.0 increased the required minimum distribution age to 73 for individuals born after 1950. Beginning January 1, 2033, individuals who attain age 75 after December 31, 2032, will be required to commence distributions at age 75. This change is mandatory and affects all defined contribution plans.

• Roth Treatment of Certain Catch-Up Contributions. SECURE 2.0 requires that catch-up contributions for participants whose prior-year FICA wages exceed $145,000 (as indexed) be made on a Roth basis. For 2026, the requirement applies if FICA wages exceeded $150,000 in 2025. This requirement applies only to defined contribution plans that permit catch-up contributions. Plans that do not offer Roth elective deferrals may be required to add a Roth feature to continue permitting catch-up contributions for affected participants. In addition to amending plan documents, plan sponsors should confirm that payroll systems and recordkeeping processes are consistent with this requirement. Plan sponsors may want to use a “deemed Roth” election feature to allow for certain corrections.

• Long-Term, Part-Time Employees. The long-term, part-time employee rules require certain employees who satisfy specified service requirements to be permitted to make elective deferrals, notwithstanding more restrictive eligibility provisions. This change generally impacts 401(k) and 403(b) plans that impose eligibility service requirements for elective deferral contributions.

• Automatic Enrollment for Newly Established Plans. Effective for plan years beginning in 2025, newly established 401(k) and 403(b) plans generally must include automatic enrollment and automatic escalation features, subject to statutory exceptions. While existing plans are not subject to this requirement, employers considering the establishment of a new plan should account for these design requirements.

• Enhanced Catch-Up Contributions for Ages 60–63. Plans may permit enhanced catch-up contributions equal to 150% of the standard catch-up limit for participants ages 60 through 63. Sponsors of 401(k) and 403(b) plans that allow catch-up contributions will want to consider this change to maximize employee deferral opportunities.

• Increase in Involuntary Cash-Out Limit. SECURE 2.0 permits plans to increase the involuntary cash-out threshold from $5,000 to $7,000. Sponsors of defined contribution plans who already utilize the $5,000 cash-out threshold will want to consider making this change.

Additional Optional Provisions

• Participant Self-Certification for Hardship Distributions. Plan administrators may rely on participant self-certification of safe harbor hardship events.
• Roth Employer Contributions. Employer matching and nonelective contributions that are fully vested may be made as Roth contributions.
• Matching of Student Loan Repayments. Plans may treat qualified student loan repayments as elective deferrals for matching purposes.
• Emergency Personal Expense Distributions. Penalty-free emergency personal expense distributions of up to $1,000 annually may be made and may be repaid within three years.
• Domestic Abuse Victim Distributions. Penalty-free distributions of up to the lesser of $10,000 or 50% of account balance for domestic abuse victims may be made and may be repaid within three years.
• Terminally Ill Individual Distributions. Penalty-free distributions to terminally ill participants may be made, subject to physician certification.
• Qualified Disaster Recovery Distributions. Plans may distribute up to $22,000 to eligible disaster victims, and the distributions may be repaid within three years.
• Emergency Savings Accounts. Employers may establish short-term emergency savings accounts within a defined contribution plan.

Plan sponsors will want to review their plan amendment carefully to make sure all required and any desired optional changes are made.

If you have questions regarding the application of SECURE 2.0 to your defined contribution plan or would like assistance preparing an amendment or reviewing plan documents, please contact a member of our Employee Benefits and Executive Compensation team.