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SECURE 2.0 Technical Corrections Bill Languishes as a Result of Congressional Inaction

May 8, 2024

On December 6, 2023, Congressional leaders released a discussion draft of a bill intended to tackle drafting errors from 2022’s SECURE 2.0 Act. This bill expanded on the SECURE Act of 2019 and made sweeping changes to provisions in the Internal Revenue Code as well the Employee Retirement Income Security Act (ERISA). 

Technical Errors in SECURE 2.0

The SECURE 2.0 Act was attached to the Consolidated Appropriations Act of 2023 and had overwhelming bipartisan support. However, it contained several drafting errors which need to be corrected. Prior to the bill being introduced, a bipartisan tax committee leadership letter was sent to the IRS indicating that Congress intended to correct the drafting errors using legislation and to keep Congressional intent in mind when issuing any guidance related to SECURE 2.0. Accordingly, the IRS has provided some relief to taxpayers by delaying implementation of certain provisions. 

Corrections in the Bill

The bill contains provisions to address these errors. The changes will be retroactive to the day SECURE 2.0 was enacted. The following provisions are notable corrections:

Catch-Up Contributions

The SECURE 2.0 Act added a provision that restricts catch-up contributions for participants who have reached the age of 50 and whose FICA wages exceeded $145,000 (as indexed for inflation) in the prior year. These participants will only be allowed to contribute Roth catch-up contributions.  In making this change, SECURE 2.0 eliminated the section of the IRC that allows for any catch-up contributions for all participants for tax years beginning after December 31, 2023. 

The bill would correct this issue and allow for catch-up contributions beginning in 2024. The IRS has also provided relief to taxpayers by delaying the implementation of this provision until January 1, 2026.

Required Minimum Distribution Age

SECURE 2.0 increases the age at which required minimum distributions must start from 73 to 75. The bill is ambiguous about the treatment of individuals who were born in 1959, as they will turn 73 before 2033 and turn 74 after 2032. The bill would clarify that the RMD age for these individuals will be 73.

Small-Business Retirement Plan Startup Credit

SECURE 2.0 created a new tax credit for small businesses that start a defined contribution plan, based on the employer’s contributions to employee accounts of up to $1,000 per employee for five years equal to the applicable percentage of eligible employer contributions to an eligible employer plan (not including a defined benefit plan). This credit applies to employers with up to 50 employees and is phased out for employers with between 51 and 100 employees. It also increased an existing retirement plan start-up credit from 50% to 100% of administrative costs (capped at $5,000) for employers with less than 51 employees. The technical correction bill would clarify that employers may qualify for both credits, and that the new credit is not subject to the $5,000 limitation.

Starter Retirement Plans

Under SECURE 2.0, employers who do not already have a retirement plan may establish a new type of tax-deferred retirement plan, called a starter plan as either a 401(k) plan or 403(b) plan as appropriate for the type of organization. These plans are limited to employee salary deferral only.  As enacted, these plans are limited to an annual deferral of $6,000, plus a catch-up contribution of $1,000 for participants aged 50 or older. The technical correction bill would replace the $6,000 limit with the IRA contribution limits as adjusted for inflation, which are currently $7,000, plus the catch-up of $1,000. 

Catch-Up Contributions for Individuals Age 60-63

The SECURE 2.0 allows for individuals who are age 60-63 to make higher catch-up contributions, equal to either $10,000 or 150% of the 2024 catch-up contribution for other participants. The reference to “2024” was in error. The draft bill would correct this reference to “2025.”


SECURE 2.0 allows for SIMPLE and SEP plans to include a Roth option. The technical correction bill would clarify that these contributions would not count against an employee’s contribution limit to a separate Roth IRA. 

Mandatory Automatic Enrollment

Under SECURE 2.0, certain plans must offer an eligible automatic contribution arrangement (“EACA”) with automatic contribution increases. Generally, plans established before December 29, 2022, are exempt from this requirement. However, employers who adopt “a plan maintained by more than one employer” after December 29, 2022, are not eligible for the exception, even if the plan itself existed before that date. The draft bill would clarify that the mandatory automatic enrollment provisions do not apply to an employer that adopts a pre-existing multiple employer plan. 

Next Steps

The bill has not been formally introduced in Congress yet. Instead, the released text is what is known as a “discussion draft.” The bill will need to be attached to a larger bill to get traction. The best vehicle may be the upcoming FAA Reauthorization Bill, which is considered “must-pass.” If the bill fails to be attached to the FAA Reauthorization Bill, the next big “must-pass” legislation would be the Farm Bill in September. 

The fact that leadership and ranking members are united in their support of the bill is a good indication that the bill will eventually become law. Proactive taxpayers should engage a trusted tax advisor to keep themselves apprised of any tax law changes. 

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