With the SECURE 2.0 Act (SECURE 2.0) being signed into law, there is a focus on improving the flexibility for participants to access money from their retirement account for more immediate emergencies.
Section 314. of the SECURE 2.0 permits a participant who has been a victim of domestic abuse to receive a distribution from their retirement account (401(k), 403(b), and 457(b) plans.
The provision would allow the individual to take the lesser of $10,000 (indexed for inflation) or 50% of their vested account balance. The distribution would not be subject to the typical 10% early distribution penalty that is normally applied to distributions taken before retirement age.
The distribution must also be taken within 12 months of the domestic abuse incident. If a plan were to adopt this provision it could allow for the participant to self-certify that the incident of domestic abuse actually occurred.
Additionally, the individual could repay the amount taken for the following 3-year period and receive a refund for income taxes on the amount repaid (under certain circumstances).
This new plan provision will be accessible starting in 2024 for plans that choose to adopt it.
If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at [email protected].
This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.
About SECURE 2.0
SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.
This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.
The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.
About Schneider Downs Retirement Solutions
Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.
Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
