In late December 2023, the Internal Revenue Service provided additional guidance in the form of questions and answers (“Q&As”) with respect to certain key qualified retirement plan provisions of the Consolidated Appropriations Act, 2023, known as the SECURE 2.0 Act of 2022 (“SECURE 2.0”).
For 401(k) plan sponsors, here are a few items of interest:
- Small Financial Incentives. Something known as the “contingent benefit rule” has long provided that a plan cannot condition any other benefit (other than matching contributions) on whether an employee makes 401(k) deferrals. Section 113(a) of SECURE 2.0 changed this to allow an employer to provide a “de minimis” financial incentive to employees to encourage them to make deferrals and save for their retirement.
