Industry & Regulatory News

Yesterday, President Biden signed the Consolidated Appropriations Act of 2023 into law, which included the SECURE 2.0 Act of 2022. As previously announced, both the Senate and the House approved the Consolidated Appropriations Act of 2023, last week.

The IRS has released a proposed rule titled Use of an Electronic Medium to Make Participant Elections and Spousal Consents. The proposed regulation provides an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or a plan representative and clarifies that certain special rules for the use of an electronic medium for participant elections also apply to spousal consents.

The regulation is proposed to apply beginning on the date that is six months after publication of the Treasury decision adopting these rules as a final regulation in the Federal Register. However, taxpayers may immediately rely on the proposed rule. This guidance comes as previous temporary relief from the physical presence requirements expires at the end of the year.

Under the proposal, a plan may accept a spousal consent witnessed remotely by a notary public provided that

• The signature of the person signing the spousal consent is witnessed by the notary public using live audio-video technology,
• Requirements related to access, authentication, review and confirmation are met,
• The remote witnessing is consistent with state law requirements that apply to the notary public

The proposed rule also sets forth remote witnessing rules for spousal consents witnessed by a plan representative. A plan may accept spousal consent witnessed remotely by a plan representative, provided that

• The signature of the person signing is witnessed using live audio-video technology
• Requirements related to access, authentication, review and confirmation are met, and
• The remote witnessing satisfies the following five requirements
  • The person signing the spousal consent must present a valid photo ID
  • The live audio-video conference must allow for direct interaction between the person signing and the plan representative
  • The person signing must transmit by electronic means a legible copy of the signed document directly to the plan representative on the same date that the spousal consent is signed
  • The plan representative must acknowledge that the signature has been witnessed and transmit the consent and acknowledgement back to the person signing the consent
  • A recording of the audio-video conference during which the spousal consent was signed remotely must be made and retained by the plan representative

The rule makes several other clarifications — including defining spousal consent and specifying that rules regarding use of an electronic medium for participant elections also applies to spousal consents — and modifies Example 3 in the regulation to demonstrate applicability of requirements with respect to spousal consent.

The proposal is set to be published on December 30, 2022. Comments must be made within 90 days of publication in the Federal Register.

The IRS has announced the postponement of certain tax-related deadlines for victims of severe winter storm in New York. The tax relief postpones various tax filing deadlines that began on December 23, 2022. Affected individuals and households who reside or have a business in Erie and Genessee counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after December 23, 2022, and before April 18, 2023, will have until April 18, 2023, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after December 23, 2022, and before April 18, 2023.

"Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

A final rule from the IRS titled “Electronically Filed Returns” has left The Office of Management and Budget.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold above which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold would be further reduced to 10 returns.

A February 2022 publication of the 2022 tax year General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) released by the IRS indicates its intent to issue regulations that reduce the 250-return requirement for 2022 tax returns, and that if final regulations are issued and effective for 2022 tax returns required to be filed in 2023, IRS will provide further communication regarding the change. Until final regulations are issued, however, the number remains at 250, as reflected in these instructions.

All of us at Ascensus are delighted by the passage of SECURE 2.0 and the bipartisan support that led to this important legislation. Thanks to the collaboration of our elected officials, savers across the U.S. will have additional opportunities to create more certain financial futures and greater peace of mind. 

The House of Representatives has passed the Consolidated Appropriations Act of 2023, HR 2617, today with a 225-201-1 vote. Included in this bill is the SECURE 2.0 Act of 2022. Following the Senate’s approval on December 22, 2022, the bill will now be presented to the President for his signature.

The Senate has approved the Consolidated Appropriations Act, 2023 (CAA 2023), by a 68-29 vote. Included in this bill is the SECURE 2.0 Act of 2022.

Retirement plan assets should be invested prudently to obtain the best possible financial returns, of course. But what if your plan invests in a company that conducts business in a way that violates your ethical values? For example, is it okay for a plan administrator to buy stock in a company with a record of environmental violations and polluting with impunity? Should that behavior affect whether a company qualifies as a suitable retirement plan investment? Is it possible, or even likely, that a company that responsibly produces a similar product may actually be a better choice, measured both by investment returns and by other factors?

Congress is expected to vote this week on the Consolidated Appropriations Act of 2023 (CAA 2023), which would serve to fund the federal government for a full year. Included in the bill is a two-year extension that would allow high deductible health plans (HDHPs) to waive the deductible for telehealth and other remote care services without causing plan participants to lose the ability to contribute to a health savings account (HSA). 

Senate Appropriations Committee Chairman Patrick Leahy (D-VT) has released HR  2617, the Consolidated Appropriations Act of 2023, a $1.7 trillion fiscal year 2023 omnibus appropriations bill, whose provisions will fund government operations for the fiscal year. Included in this legislation, as has been anticipated by many, is the SECURE 2.0 Act of 2022.

The Securing a Strong Retirement Act of 2022 was passed by the House of Representatives earlier this year. The Senate HELP committee approved the RISE & SHINE Act and the Senate Finance committee likewise approved the EARN Act. The House and Senate worked together to combine these bills into the SECURE 2.0 Act that has now been included in the Consolidated Appropriations Act.

Inclusion in the Consolidated Appropriations Act was considered the last opportunity for passage of this retirement legislation in the current Congress. The Consolidated Appropriations Act must now be approved by the House and Senate and signed by the President, for it—and the SECURE 2.0 Act—to become law.

Among the 90 provisions in the SECURE 2.0 Act, some of the significant items include the following.

• Allowing workers to participate in employer plans after 2 consecutive 12-month periods of 500 hours of service, beginning in 2025
• Increasing the catch-up contribution limit for select age groups
• Requiring catch-up contributions to be made on a Roth basis for those earning more than $145,000, except for SIMPLE plans
• Permitting employer contributions to be made on a pre-tax or Roth basis
• Increasing the RMD age to 73 in 2023, and age 75 in 2033
• Expanding automatic enrollment in retirement plans
• Creating a Retirement Savings Lost and Found
• Creating new emergency savings accounts linked to individual account plans
• Allowing student loan payments to be treated as elective deferrals for purposes of matching contributions
• Modifying the existing saver’s credit to provide for a matching contribution to the individual’s retirement savings vehicle
• Creating a “starter 401(k) plan” with reduced contribution limits and nondiscrimination safe harbors
• Increasing the small employer startup credit to 100% for certain employers
• Increasing the age of disability onset for qualified ABLE programs to age 46
• Allowing certain rollovers to Roth IRAs from 529 college savings accounts

Additional details on the SECURE 2.0 Act will continue to be provided. Visit ascensus.com for the latest information.