What You Need to Know About: The SECURE Act

In December of 2019, President Donald Trump passed the Setting Every Community Up for Retirement Enhancement Act or SECURE Act. Some of the Act aims as making it easier for small business owners to create more affordable and easier to administer retirement plans. Key takeaways from the SECURE Act include:

  • Small Business Tax Credits have increased for businesses who start a 401(k) Plan, thus making starting a plan more affordable.
  • New automatic enrollment plan tax credit created.
  • Removes the annual notice requirement for Safe Harbor 401(k) Plans that utilize the nonelective contribution instead of the match.
  • 401(k) Nonelective Safe Harbor Plans can be adopted up until 30 days before plan year end, instead of 90 days prior.
  • Maximum automatic contribution rate is increased to 15% from 10% in Qualified Automatic Contribution Arrangements (QACAs).
  • Pushes the age of 70 ½ to 72 for retirement plan participants needing to take RMDs or ‘required minimum distributions.
  • Part-time employees will be eligible to participate after completing 500 hours of service in each of 3 consecutive 12-month periods, if at least age 21 at the end of that time. These employees do not have to share in company contributions.
  • Pooled Employer Plans (PEPs) will be allowed which could make it easier for small businesses to administer their retirement plan.

“There is a lot of hype in the government and media about how the SECURE Act will make it cheaper to sponsor a plan. I don’t know if recordkeepers could lower their annual costs any more than they have over the last 8 or 9 years; but it definitely will provide lower start-up costs through the tax credits, and make it easier to administer plans if utilizing a Safe Harbor approach or a PEP,” stated Todd Yawit, Director / Retirement Plans at Saxon Financial Services, Inc.

For most plans and provisions, the SECURE Act became effective on January 1, 2020. However, for Pooled Employer Plans (PEPs), the SECURE Act will go into effect on January 1, 2021. For further information on how the SECURE Act will affect your retirement plans, contact Todd Yawit at (513) 573-0129 or tyawit@gosaxon.com.

IRS limits PPACA group tax credit relief

Originally posted December 18, 2013 by Allison Bell on http://www.benefitspro.com

A few U.S. counties might have a slightly easier time using the federal health insurance tax credit next year.

The Internal Revenue Service has temporarily eased the qualification rules for the tax credit – but only for employers in five counties in Wisconsin and 37 of the 39 counties in Washington state.

The IRS will let small employers in those counties use the tax credit in 2014 without offering a health plan from a public health insurance exchange, according to IRS Notice 2014-6.

Carriers in the affected counties won’t be offering any small-group exchange plans in 2014, officials say.

Section 1421 of the Patient Protection and Affordable Care Act created the tax credit by adding Section 45R to the Internal Revenue Code.

Before 2014, any small employer with modestly paid employees could use the tax credit.

Once the Small Business Health Options Program exchange plans open, employers are supposed to use the credit to pay for SHOP exchange plan coverage.

HHS Issues Proposed Rule on Exchange Liability; IRS Provides Coordination Options for Noncalendar-Year Plans

On Jan. 14, 2013, the Department of Health and Human Services (HHS) issued another lengthy proposed rule under the Patient Protection and Affordable Care Act (PPACA).  Among other things, the proposed rule provides some information on how employers will be notified if an employee applies for a premium subsidy / tax credit and how an employer may appeal a determination of premium subsidy eligibility that it believes is incorrect.  The proposed rule is HERE

Employee Requests for Premium Subsidies

An employee will be eligible for a premium subsidy only if:

  • His household income is less than 400 percent of federal poverty level,
  • He purchases coverage through the public exchange,
  • He does not have access to affordable, minimum value coverage through his employer, and
  • He is not covered by a plan through his employer that provides minimum essential coverage (even if that coverage is not affordable or it does not provide minimum value)

The employee will be required to provide information to the exchange about his income and access to employer-provided affordable, minimum value coverage.  The exchange (or HHS if the state asks HHS to do this) will attempt to verify this information from available data bases, but in all likelihood it will need to contact the employer for verification of information regarding coverage.

HHS is considering the use of a one-page template that the employer would complete with respect to the employee’s eligibility for coverage, plan affordability and plan value.

Employee Eligibility for a Premium Subsidy

Under the proposed rule, HHS or the exchange would notify the employer if an employee is determined to be eligible for a premium subsidy (“certified under Section 1411”).  The employer would have 90 days to appeal the determination if it believed the employee should not be eligible for the subsidy.  (All employers, regardless of size, would receive the notice that an employee has been found to be eligible for a premium subsidy. Employers large enough to be responsible for paying a penalty on employees who receive a premium subsidy would receive a separate notice from the IRS actually assessing the penalty. The IRS notice most likely would be sent during the second quarter after the calendar year for which the premium subsidy was provided.)

Coordinating Exchange and Plan Open Enrollments

On Jan. 2, 2013, the IRS issued a detailed rule that, among other things, provides that noncalendar-year plans may amend their Section 125 plans to allow employees to make midyear changes because of PPACA.  Open enrollment for the exchanges will begin in October 2013 for a Jan. 1, 2014, effective date, and the individual coverage mandate also begins Jan. 1, 2014.  The proposed rules provide that employers with noncalendar-year plans may amend their Section 125 plans to allow participants to drop coverage as of Jan. 1, 2014, to enroll in an exchange plan.  Employers also may amend their plans to allow employees who had declined coverage to enroll and pay premiums on a pre-tax basis as of Jan.1, 2014, so that the employee can meet the coverage requirement.  (Employers considering allowing a special enrollment for those who had declined coverage should obtain the consent of their carrier or reinsurer before implementing this option.)   The proposed rule is here:


Important: The HHS rules are still in the “proposed” stage, which means that there may be changes when the final rule is issued.  Employers should view the HHS proposed rule as an indication of how plans will be regulated beginning in 2014, but need to understand that changes are entirely possible.