Get ready for more guidance this year related to Secure 2.0 — including the long-awaited final regulations on required minimum distributions — according to retirement policy expert J. Mark Iwry, former head of national retirement policy during the Obama-Biden administration who's now a nonresident senior fellow at the Brookings Institution in Washington.
Treasury, the Internal Revenue Service and the Labor Department have already been busy issuing guidance on the retirement law, which passed in December 2022. Iwry and his colleagues at Brookings note in a recent paper — Secure 2.0 and The Past and Future of the U.S. Retirement System — that Secure 2.0 is "the most extensive set of changes to retirement law in the last 15 years."
Iwry discussed the paper during a recent Brookings event.
In a recent interview, Iwry discussed with ThinkAdvisor what to expect this year from Treasury, IRS and Labor regarding Secure 2.0.
THINKADVISOR: Both Treasury and IRS as well as the Labor Department have released Secure 2.0 guidance. Can we expect this pace to continue?
MARK IWRY: Treasury and IRS have just issued a load of Secure 2.0 guidance — much of it driven by the traditional year-end deadline and some of it still being digested by the market.
So their pace might slow a bit in the near future. Another factor that might have the ultimate effect of slackening the pace of Secure 2.0 guidance is the recent extension by Treasury/IRS — from the end of 2025 to the end of 2026 — of the deadline for making plan amendments to comply with Secure 2.0 (as well as Secure 1.0 and the CARES Act).
What guidance have they been providing?
The recent Treasury/IRS guidance included the extensive "grab bag" notice answering questions about a dozen different Secure 2.0 provisions. In addition, on pension-linked emergency saving accounts (PLESAs), Labor provided 20 FAQs, coordinated with a bit of Treasury/IRS guidance on the emergency saving anti-abuse provisions.
Treasury/IRS have also released substantial and long-awaited guidance on the new requirement, effective last month, that plans allow participation by "long-term part-time employees."
Some advisors, feeling less than grateful given the delay in providing guidance on the many questions raised by this requirement until just days before its statutory Jan. 1, 2024 effective date, drily noted that the "long-term" in "long-term part-time" was intended by Congress to refer to the employees, not to the time it would take regulators to issue guidance.
In fact, there is reason to think that the guidance was drafted much earlier, but retirement and employee benefits are not always high in the pecking order when it comes to getting all the necessary approvals and sign-offs up the chain at Treasury and IRS.
Adding to the challenge on this issue for advisors and plan sponsors, the Treasury/IRS somewhat uncharacteristically failed to provide assurance that "reasonable good faith" compliance with the statute would suffice as opposed to strict compliance with the details of this last-minute guidance.
