Top 10 Frequently Asked Questions to PeopleSoft about SECURE 2.0

Over the last 9 months, SECURE 2.0 always pops up in conversations about Benefits.  Just like the legislative act, the questions vary from simple to very complex.

If you have been following my blogs, listened to the podcast I did with Robbin Velayedam, or the Quest Webinar, you know that the most burning questions have been about Section 603. This section is the provision that requires certain employees’ catchup to be contributed to a Roth account and had an effective date of January 1, 2024.

On August 25^th the IRS issued a Notice that provides a two-year administrative transition for Section 603. They also outlined some of the outstanding questions they plan to answer in the future.  While this does give us an opportunity to understand more about how this one provision will work, it is important to remember that there are other provisions to consider as well. To assist customers in understanding what Oracle/PeopleSoft is working on I have created a FAQ based on the questions I have heard from you.

Disclaimer: The information in the documents may not be construed or used as legal advice about the content, interpretation or application of any law, regulation, or regulatory guideline. Customers and prospective customers must seek their own legal counsel to understand the applicability of the law or regulation.

1. What is SECURE 2.0?

SECURE 2.0 is relatively new legislation that was signed into law by President Biden on December 29, 2022.  SECURE 2.0 builds upon the 2019 SECURE Act (“SECURE 1.0”) which was signed by President Trump in December 2019.  The “SECURE” acronym stands for “Setting Every Community Up for Retirement Enhancement”.

The original legislation created changes for long-term retirement savings for Americans of every age. The new provisions in SECURE 2.0 are designed to make it more attractive for employers to offer retirement plans and easier for all employees to start saving. Here is a link to the Congressional Bill.

2. Why does it matter to customers?

Employers are responsible for complying with these legislative changes.

There are 92 provisions in Secure 2.0. Some of the legislation may require customers to make changes to their existing savings plans and offerings. Of the 92 provisions, many do not affect the enrollment and collection of funds and do not require any enhancements or changes in the PeopleSoft Benefits product but may require action by the employer.

Originally, SECURE 2.0, Section 603 had an effective date of January 1, 2024 and was one of the first provisions that organizations were scrambling to comply with and for which Oracle PeopleSoft was working to provide enhancements.  On August 25, 2023, the IRS released an announcement of a two-year administrative transition period for the requirement that certain catch-up contributions be designated as Roth contributions.

Section 603, in layman’s terms, requires employees, who participate in 401, 403, or 457 plans, who are over the age of 50, and who made more than a specific amount in FICA earnings in the prior year, may only contribute their catch-up dollars to a Roth after tax fund.

IRS guidance also stated that they plan to provide more details in the future for some open questions. It is important to remember that this delay is ONLY for Section 603 and does not address the other 91 provisions of SECURE 2.0. Continue to read this document for information about a few of the provisions we plan to address.

3. What are some of the enhancements that PeopleSoft anticipates to deliver outside of Section 603 requirements?

Section 109

Section 109 provides for a “super” catch-up contribution for individuals who are age 60-63. This is effective after December 31, 2024.

In order to provide different catch-up contribution limits, our strategy is to provide a new Age Limit grid on the Limit Table that may look something like the below. Then update the Savings Age Catch Up Extension run control and application engine to use these limits to populate the current Benefits Savings Management page for each eligible participant.

Benefits is only providing this functionality for customers that utilize Savings Plans. If you are only using General Deductions to take savings contributions, you will have to configure the general deduction limits and manually track other functionality.