First In A Series

On December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act, 2020, which includes the Setting Every Community Up for Retirement Enhancement Act (the “SECURE” Act). The SECURE Act amounts to the most significant retirement legislation in more than a decade. It makes numerous changes (including a variety of enhancements) affecting qualified retirement plans, 403(b) and 457(b) plans, individual retirement accounts, and other employee benefits. Employers should understand these changes to prepare themselves for the resulting effect on retirement plan administration and financial planning.

The SECURE Act is the product of bipartisan legislation approved almost unanimously by the House of Representatives early in 2019, but which stalled for partisan reasons in the Senate. It was included in “must-pass” spending legislation that was pushed through Congress in the waning days of 2019. The Act includes almost 30 changes that are intended to promote the adoption of employer-sponsored retirement plans, facilitate lifetime income options, and lessen administrative burdens.

Some of the changes under the SECURE Act are effective immediately, while others are effective in plan or tax years beginning on or after January 1, 2020. The Act provides for a remedial plan amendment period that does not end until the last day of the 2022 plan year (the 2024 plan year for governmental plans). Therefore, plan sponsors generally have sufficient time to amend plan documents to comply with any required or optional changes. Nevertheless, employers must modify certain aspects of plan administration (and potentially financial planning decisions) now to align with the SECURE Act’s more immediate changes.

This is the first in a series of articles describing key provisions of the SECURE Act. This article provides an overview of the most relevant provisions and their effective dates. We will provide a more detailed discussion of these provisions in subsequent articles.