“ERIC is a national advocacy organization exclusively representing the largest employers in the United States in their capacity as sponsors of employee benefit plans for their nationwide workforces …,” read the letter sent to the agencies from ERIC President and CEO James Gelfand on May 29. “As such, ERIC is very interested in guidance that can help make plan administration less burdensome, more efficient, and better able to serve plan participants.”

SECURE 2.0 “contained dozens of updates and enhancements to our voluntary, private-sector retirement system,” said Gelfand. However, ERIC urges the Treasury and the IRS to include the following changes, as mentioned in the letter:

Matching contributions for student loan payments

SECURE 2.0 extended “the ability of plan sponsors to establish programs to provide employer contributions that match qualifying employee student loan payments …,” said Gelfand. However, “the IRS should confirm that plan sponsors and administrators are permitted to receive information about the amount and date of loan payments … from a third-party service provider” that may “provide holistic financial wellness tools to employees, including those with student loans.” These tools provide the ability to link student loan information with the retirement plan recordkeeper’s platform.

“We are concerned by a recent change by the Department of Education that has impacted the ability of third-party service providers to automatically link this information to a participant’s account on a recordkeeper’s website. …,” said the letter. ERIC is urging the agencies “to alert the Education Department of the implications of the potentially negative consequences of restricting access to bona fide third-party service providers.”

Catch-up contributions

SECURE 2.0 required that, beginning after December 31, 2023, individuals with wages over $145,000 in the prior year may only make catch-up contributions on a Roth basis. The IRS then provided a two-year administrative transition period that “to help plan sponsors and service providers navigate this new, complicated requirement,” said ERIC.

However, “we are now aware that some service providers and sponsors will have difficulty implementing the provision in the proposed regulations that says that the catch up being made on a Roth basis is only required for a participant to the extent their other Roth contributions made for the plan year are less than the catch up dollar limit,” said the letter. “This requires systems changes and new coordination and tracking between payroll providers and plan administrators.

“It would be helpful if the IRS provided for optional treatment of this requirement or additional transition relief on this issue … in advance of the implementation deadline.”

Auto-enrollment

SECURE 2.0 requires that, beginning in 2025, certain employer plans must include an automatic enrollment feature, however, “grandfathered” plans are exempt from this requirement.

Related: IRS extends deadline for RMDs, reflecting SECURE 2.0 changes, until 2026

However, ERIC is urging the IRS to “coordinate with the Department of Labor regarding the interaction of automatically-enrolled participants’ contributions in qualified default investment alternatives with the rules surrounding pension-linked emergency savings account (PLESA) funds … to avoid legal uncertainty and potential disincentives to establishing PLESAs.”