The Setting Every Community Up for Retirement Enhancement Act (the SECURE Act), signed into law on Dec. 20, 2019, provides incentives for employers to provide retirement plans and also enhances retirement opportunities for employees. The SECURE Act contains many provisions that apply to employer-sponsored retirement plans in 2020. Although plan amendments do not have to be made for a few years, plan administration (including notification to employees and participants and revised election forms) will need to change much sooner. This Holland & Knight alert provides a summary of the major provisions affecting employee benefits. After being approved by both the U.S. House of Representatives and the Senate, the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act) was signed into law by President Donald Trump on Dec. 20, 2019, as part of the Further Consolidated Appropriations Act, 2020. While providing incentives for employers to provide retirement plans and enhancing retirement opportunities for employees, the SECURE Act also contains provisions to increase tax revenue. A summary of the major provisions affecting employee benefits are outlined below.
Relief for Employers
Greater Availability of Multiple Employer Plans. Prior to the SECURE Act, unrelated employers (not in the same controlled group and without a geographical or industry connection) could not participate in the same qualified defined contribution plan. Under the SECURE Act, if certain fiduciary and registration requirements are met, a qualified defined contribution plan may be maintained by unrelated employers, which can reduce the burden on individual employers of operating a qualified retirement plan. The SECURE Act also contains provisions limiting the liability for operational failures to only the employer responsible for the failure, rather than the entire plan. (Applies to plan years beginning after Dec. 31, 2020) Relaxed Requirements for Non-Elective Safe Harbor 401(k) Plans. The safe harbor notice requirement is eliminated for nonelective 401(k) safe harbor plans (but not for 401(k) plans that have safe harbor matching contributions). A plan may be amended to become a nonelective 401(k) safe harbor plan for a plan year at any time prior to the 30th day before the end of the plan year (i.e., before Dec. 1 for calendar plan years). A plan can be amended to become a nonelective 401(k) safe harbor plan after the 30th day before the end of...