ErisaALERT Secure Act(Setting Every Community Up for Retirement Enhancement Act)-Erisa Diagnostics, Inc

Further Consolidated Appropriations Act, 2020 was enacted on December 20, 2019. It is comprised of various “Divisions”. Division N is Health and Human Services Extenders which includes repealing certain ACA provisions and Division O is Setting up Every Community Up for Retirement Enhancement (SECURE) which impacts retirement plans. This ALERT will briefly summarize items of interest in Subtitle E of Division N as well as Division O. More guidance is needed in many areas, so we are keeping this ALERT simple. The following list does not present all sections of the legislation; only those we believe relevant for most plan sponsors. Our goal is to either provide summaries or maintain a list of any guidance as it is issued

Provision	Change	Act Section	Effective
Division N Health and Human Services Extenders
Subtitle E – Revenue Provisions
Repeal of medical device excise tax	Excise tax on sale of medical devices repealed	501	Applies to sales after December 31, 2019
Repeal of annual fee on health insurance providers	ACA’s annual fee on health insurance providers repealed	502	Calendar years beginning after December 31, 2020
Repeal of excise tax on high cost employer sponsored health coverage	ACA’s Cadillac tax repealed	503	Tax years beginning after December 31, 2019
Division O – SECURE Act
Title I – Expanding and Preserving Retirement Savings
Multiple employer plans and pooled employer plans	Provides for an open MEP called the Pooled Employer Plan (PEP).	101	Plan years beginning after December 31, 2020
Increase in 10% cap for automatic enrollment safe harbor after first year	Increases the default maximum from 10% to 15%	102	Plan years beginning after December 31, 2019
401(k) Safe Harbor Notice	Eliminates safe harbor notice for nonelective contributions	103	Plan years beginning after December 31, 2019
Repeal of maximum age for traditional IRA contributions	IRC 219 (d) repealed	107	Contributions made for taxable years beginning after December 31, 2019
Loans via Credit Card	IRC 72(p) amended to prohibit loans through credit cards and similar arrangements	108	Loans made after December 20, 2019
Portability of lifetime income options	Permits transfers of lifetime income arrangements.	109	Plan years beginning after December 31, 2019
Long term part-time employees	Amends IRC 401(k)(2)(D) to provide 401(k) eligibility for long term part-time employees who complete 500 hours of service in 3 consecutive 12 months periods; age requirements can still apply	112	Plan years beginning after December 31, 2020 except that 12-month periods before January 1, 2021 will not be counted
Penalty free withdrawals for birth or adoption of child	Amends IRC 72(t)(2) by adding tax free distribution for qualified birth or adoption expenses up to $5,000.	113	Distributions made after December 31, 2019
Required Minimum Distribution (RMD)	For individuals born after June 30, 1949 increases age at which RMDs must begin to age 72	114	Distributions made after December 31, 2019
Title II Administrative Improvements
Plan adopted by filing due date may be treated as in effect as of close of year	Plans adopted after close of the plan year but before filing date for employer’s tax return will be considered adopted as of the last day of the taxable year.	201	Plans adopted after December 31, 2019
Combined annual report for group of plans	Allows individual account plans or defined contributions plans to file one annual report if plans have: Same trustee Same one or more named fiduciaries Same administrator Same plan year Same investment options for participants and beneficiaries	202	Returns for plan years beginning after December 31, 2021
Disclosures regarding lifetime income	Plans must provide amount of monthly payments the participant or beneficiary would receive if the total benefits accrued were used to provide a lifetime stream of income.	203	Model disclosure to be provided not later than one year after enactment. Disclosures must be provided not later than one year later than issuance of final interim rules, model notice and assumptions to be used.
Fiduciary safe harbor for selection of lifetime income provider	ERISA 404 is amended to add section (e) to provide a safe harbor for the selection of an annuity provider.	204	No effective date
Modification of nondiscrimination rules to protect older, longer service participants	Provides rules for testing closed plans.	205	Effective at date of enactment.
Title IV Revenue Provisions
Modification of required distribution rules for designated beneficiaries	Changes distribution rules for beneficiaries who are not “eligible designated beneficiaries”); must be paid by the end of the 10^th calendar year following employee or IRA owner’s death.	401	Effective for deaths after December 31, 2019
Increase in penalty for failure to file	Increases penalty for failure to file tax return.	402	Returns due after December 31, 2019
Increased penalties for failure to file retirement plan returns	Substantially increases Form 5500 penalties and other required notifications.	403	Returns due after December 31, 2019
Title VI Administrative Provisions
Provisions relating to plan amendments	Plans have until the first plan year beginning on or after January 1, 2022 or later date as prescribed by the Secretary to amend plans.	601

Disclaimer: This material is for the sole purpose of providing general information and does not under any circumstances constitute legal advice and should not be used as a substitute for legal advice. You should seek the advice of counsel when applying the requirements to your plan. For more information on this ErisaALERT contact us by phone at 610-524-5351 and ask for Mary Andersen at ERISAdiagnostics, Inc. or Paul Protos at ATR, Inc. at 610-994-7442.
Mary is co-author of the Form 5500 Preparers Manual published by Wolters Kluwer.

ACA, Affordable Care Act, IRS