Eight retirement groups press Congress on SECURE 2.0 corrections

Eight retirement industry organizations, including the ICI, the IRI and the U.S. Chamber of Commerce, asked congressional leaders to finalize and pass the SECURE 2.0 Technical Corrections Act of 2023, 401(k) Specialist reported. The American Benefits Council and The SPARK Institute were among the other signers the outlet named.

The letter went to Sens. Chuck Schumer, Mitch McConnell, Bernie Sanders and Bill Cassidy, along with Reps. Mike Johnson, Hakeem Jeffries, Virginia Foxx and Bobby Scott. The groups wrote that the corrections would fix issues delaying SECURE 2.0 provisions for select groups, and asked members to act so the bill's provisions could be implemented in a timely manner.

The letter's main concern is the absence of a “distribution trigger” in Section 326, which provides special treatment for distributions to terminally ill plan participants beginning on or after Dec. 21, 2022. Without a trigger, terminally ill participants cannot take distributions from their retirement account solely because of terminal illness, the groups said. The individual must otherwise be eligible for a plan distribution, such as termination of service or age 59½.

“This undermines the purpose of the new provision and could prevent a terminally ill individual from accessing assets critical to their medical and other care during this time,” the groups wrote. The letter describes the missing trigger as inconsistent with other SECURE 2.0 penalty-free distribution provisions, including those for emergency expenses, domestic abuse victims and qualified disasters.

The groups also ask Congress to resolve how Section 101, which would expand automatic enrollment in retirement plans, applies to plans that merge into pooled employer plans and multiple employer plans. The letter questions whether the provision exempts those plans from the automatic enrollment requirements.

“We understand that Congress intended for the exemption to be based on the date of establishment of the adopting employer's plan, not the date of establishment of the MEP/PEP,” the groups wrote. “However, Treasury/IRS guidance might be read as basing the exemption on the MEP/PEP establishment date.”