The Secure 2.0 Act of 2022 authorizes numerous new provisions that employers can choose to include or exclude in the retirement plans they sponsor.

Recently, retirement plan vendors (vendors) have been sending communications to plan sponsors informing them about opportunities to opt-in or opt-out of new optional provisions including:

• New withdrawal opportunities that are not subject to a 10% early withdrawal penalty for participants under age 59 ½ and which can be recontributed to the plan within 3 years from withdrawal:
  • Domestic Abuse Distribution—Allows participants who are domestic abuse victims to withdraw the lesser of $10,000, or 50% of their vested account balance.
  • Federally Declared Disaster Distribution—Allows participants living in the area of a major Federal Emergency Management Agency declared disaster to withdraw up to $22,000 to cover losses due to that disaster.
  • Qualified Birth or Adoption Distribution—Allows participants to withdraw up to $5,000 per child within one year of the child's birth or finalized adoption.
• Emergency Withdrawal— Allows participants to withdraw the lesser of $1,000 or their vested balance in excess of $1,000 (i.e., $500 if the vested balance is $1,500) to cover expenses related to a personal emergency. Emergency withdrawals are not subject to the 10% penalty.
• Increased Catch-Up Contributions for Participants Age 60 to 63—Allows participants age 60 to 63 to increase their catch-up contribution to the greater of $10,000 or 150% of the regular catch-up amount limit. For example, if the regular catch-up limit is $7,500, the increased catch-up limit will be $11,500 ($7,500 x 150%). (You may have to affirmatively opt out of adding these increased limits to your plan.)

While your vendor may reach out to you about these new withdrawal opportunities, you may also have to contact them to affirmatively request adding them to your plan. Either way, it is critical to act quickly because the deadlines for making these decisions are rapidly approaching, and your vendor may need time to make the necessary changes to your plan.

Bottom Line for Restaurateurs

It is important to read communications from your retirement plan vendor, ask questions, and make informed choices regarding your business’ retirement plan. 

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