Perspectives : Fiduciary Regulatory | August 22, 2024

Vanguard hosts innovative SECURE 2.0 Act implementation workshop

Read time: 2 minutes

On Tuesday, July 16, Vanguard hosted a SECURE 2.0 implementation workshop at its Malvern campus in partnership with the Society of Professional Asset Managers and Recordkeepers (SPARK) Institute and the National Payroll Reporting Consortium (NPRC). The workshop brought together recordkeepers and payroll companies with a focus on Roth catch-up and higher catch-up contribution limits (also referred to as “super catch-up”) to foster collaboration and synchronicity. They also addressed implementation challenges and opportunities brought forth by the consistent changes to SECURE 2.0.
The workshop offered a unique chance for industry coordination and sought ways to remove implementation roadblocks for plan sponsors while also collaborating on the best practices for integration.

Some takeaways from the workshop include:

Heightened focus on implementation readiness for Roth catch-up contributions1
  • Identified the roles and responsibilities among payroll providers, plan sponsors, and recordkeepers in determining the Roth catch-up population and how data would be transmitted to plan sponsors and recordkeepers.
  • Determined that payroll providers will ensure that contributions do not exceed IRS limits, with recordkeepers ready to perform secondary verification.
  • Discussed the need for additional clarity from the IRS about how to reconcile contributions and handle corrections.
Higher catch-up contribution limit (also referred to as super catch-up)2
  • Reiterated the consensus that the provision is optional for a plan sponsor to adopt versus a required provision that must be implemented.
  • Discussed a uniform approach to plan sponsor adoption and implementation, with most recordkeepers choosing an “opt-out” strategy starting January 1, 2025.
  • Discussed coordination between payroll companies and recordkeepers when it comes to contribution limit monitoring and applying the same approach as tracking Roth catch-up. Payroll providers will ensure that contributions do not exceed IRS limits with recordkeepers ready to perform secondary verification.
Conclusion and next steps:

This workshop underscored the necessity of ongoing collaboration and dialogue among stakeholders to effectively implement SECURE 2.0 provisions. Dave Stinnett, Vanguard’s principal and head of Strategic Retirement Consulting, captured the key value of the workshop by stating,

“As an industry, I think we all can agree that SECURE 2.0 is an extremely vast and complex piece of legislation. It is critical for recordkeepers, payroll providers, and industry voices like SPARK to come together in order to achieve collective success and to implement the provisions of SECURE 2.0 as seamlessly as possible on behalf of all plan sponsors and participants.”

We hope to continue insightful collaborations like this workshop to concentrate on other upcoming SECURE 2.0 provisions. Vanguard is a dedicated partner, voice, and knowledge base focused on providing support, advocacy, thought leadership, and implementation expertise. We continue to take a stand for all retirement investors by advocating for industry practices and policy changes that help more Americans achieve retirement success.

1Roth catch-up is a required provision effective January 1, 2026. Beginning with the 2026 taxable year, participants age 50 or older who earned more than $145,000 in FICA wages in the previous year will be required to make catch-up contributions as Roth contributions.

2Higher catch-up contribution limit is an optional provision effective January 1, 2025. This provision 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.