Required provisions set to begin January 1, 2025
Guidance on this provision is still being updated, and plan sponsors can rely on the proposed regulation until it is finalized or other guidance is issued.
LTPT employee eligibility for 2025 will be determined by tracking hours worked from January 1, 2023. Vanguard will partner with plan sponsors to provide all the information needed to identify LTPT-eligible employees.
Additional requirements of this provision state:
- Must be at least 3% but can’t exceed 10%.
- Must automatically increase yearly by 1% until reaching at least 10% (but not exceeding 15%).
- Certain participant information must be provided to the DOL to help populate the database for plan years beginning on or after January 1, 2024.
- Initially, information would be voluntarily furnished for this database as an attachment to the Form 5500, beginning with the 2023 plan year filing. Subsequently, the DOL intends to establish a portal for plans to submit this information directly to the database.
Optional provisions available in 2025
Higher catch-up contribution limit: Under this provision beginning January 1, 2025, SECURE 2.0 increases the catch-up limit for participants ages 60–63 to the greater of $10,000 or 150% of the then current catch-up limit. This will give participants an opportunity to boost their savings as they approach retirement. Vanguard is actively working on a solution to support this provision so it can be offered during the first quarter of 2025. Clients will be able to adopt this provision as soon as it becomes effective but can also decide to opt in to this provision at a later date. While Vanguard’s work is underway, there are several steps plan sponsors can take now to evaluate and prepare for this provision:
- Plan sponsors should start to work with their payroll provider or in-house department to ensure that additional catch-up amounts can be programmed to deduct the higher catch-up limit for eligible participants (ages 60–63).
- Begin to educate employees about their new rights under this provision and the benefits of how it can promote retirement savings.
Self-certification for hardship withdrawals: As part of the SECURE 2.0 Act, the optional self-certification for hardship withdrawals provision modifies current hardship rules to allow plans to permit participants to self-certify that a distribution meets the requirements for a withdrawal and helps remove an administrative barrier for those in need of financial assistance. With this change, plan sponsors are no longer required to obtain documentation or have a participant provide specific information on the need for a hardship withdrawal.
We encourage plan sponsors to determine if they want to provide easier access to retirement funds for hardships, review their current number of hardship withdrawal requests, and evaluate the current level of documentation efforts and administrative burden to determine if self-certification would benefit them and their employees.