Miscellaneous Changes (2024)

FAQs

What is the Secure 2.0 Notice 2024 02? ›

Notice 2024-02 states that the rules for Roth matching and Roth nonelective contributions are similar to the rules for designated Roth elective deferrals, notably: 1) participants must designate their irrevocable election to receive Roth employer contributions no later than when the contribution is allocated to their ...

Section 332 allows an employer to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions during a plan year, and is effective for plan years beginning after December 31, 2023.

De minimis financial incentives

The SECURE 2.0 Act made changes designed to encourage employees to contribute to their employers' 401(k) or 403(b) plans. These changes allow employers to offer small financial incentives to employees who choose to participate in these retirement savings arrangements.

Long-term part-time employees receive expanded eligibility

Prior to the SECURE Act 2.0, employees who worked between 500 and 999 hours for three consecutive years were required to be allowed to participate in their company's retirement plan. The SECURE Act 2.0 reduces the time period to two years, effective in 2025.

The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed $16,000 in 2024 ($15,500 in 2023; $14,000 in 2022; $13,500 in 2020 and 2021; $13,000 in 2019 and $12,500 in 2015 – 2018).

Under the new Secure 2.0 Act, the rules and penalties around required minimum distributions also have changed. The age for required minimum distributions was raised from 72 to 73 in 2023, and will rise to 75 in 2033. Additionally, as of 2023, the penalty for not taking required distributions decreased to 25% from 50%.

Under current law, participants cannot roll over assets from their SIMPLE IRA to another plan within the first two years of participation without being hit with a 25% penalty tax, unless an exception applies. Starting with the 2024 plan year, SECURE 2.0 will, under certain circumstances, waive the penalty.

The SECURE Act 2.0 introduced an additional option: Surviving spouses can now elect to be treated as the deceased spouse. If the surviving spouse chooses to be treated as the deceased spouse, the following are affected: Delayed Required Minimum Distributions (RMDs).

In 2024, you can cash out as much as $1,000 from a traditional 401(k) or IRA to cover an urgent need. And here's a big change: You get to define what counts as an emergency.

Beginning in 2023, the SECURE 2.0 Act raised the age that you must begin taking RMDs to age 73. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024.

What are the 401k catch-up changes for 2024? ›

401(k) contribution limits for 2024

If you're age 50 or older, you're eligible for an additional $7,500 in catch-up contributions, raising your employee contribution limit to $30,500.

A SIMPLE IRA must be the only plan an employer maintains for the year—referred to as the “exclusive plan rule.” SECURE Act 2.0, however, effective for 2024, allows for a SIMPLE IRA plan to be terminated and replaced mid-year with a Safe Harbor 401(k) or Safe Harbor 403(b).

On December 20, 2023, the Internal Revenue Service (IRS) released guidance with respect to certain provisions of the SECURE 2.0 Act of 2022 (SECURE 2.0)

New for 2023: The Secure 2.0 Act raised the age that account owners must begin taking RMDs. For 2023, the age at which account owners must start taking required minimum distributions goes up from age 72 to age 73, so individuals born in 1951 must receive their first required minimum distribution by April 1, 2025.

Secure 2.0 also established a new tax credit for small businesses that make employer contributions to a new retirement plan. This credit is available for five years for those employers with 100 or few employees who make employer contributions—up to $1,000 per employee.