SECURE 2.0: Technology Implications for TPAs

Short answer

SECURE 2.0 moved several 401(k) checks from year-end into every payroll. Systems now need prior-year FICA wages for the Roth catch-up rule, age-based catch-up limits including ages 60 to 63, multi-year hours tracking for long-term part-time employees, plan establishment dates for auto-enrollment, and new account types such as emergency savings. Treat each provision as dated, configurable rules.

From year-end to every payroll

The SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023) contains dozens of retirement provisions with different effective dates. For administration software, the important change is timing: several rules have to be applied when contributions are made, not discovered at testing time. That puts pressure on payroll intake and on the data TPAs collect from sponsors.

Provisions with the largest system impact

Provision	What it requires	System impact
Sec. 603: Roth catch-up for higher earners	Catch-up contributions of employees whose prior-year FICA wages from the employer exceed an indexed threshold must be Roth; final IRS regulations apply generally from 2027 with good-faith compliance before then	Prior-year FICA wage field per employee; payroll rule that flags pre-tax catch-ups; Roth availability per plan
Sec. 109: higher catch-up at ages 60 to 63	A higher catch-up limit for participants who attain ages 60 through 63 in the year, from 2025	Age-band catch-up limits in configuration; date of birth must be reliable
Sec. 125: long-term part-time employees	401(k) eligibility for employees with two consecutive years of 500 or more hours, for plan years from 2025	Multi-year hours history per employee; eligibility and vesting service tracking
Sec. 101: automatic enrollment for new plans	Plans established after December 29, 2022 generally must auto-enroll from plan years beginning after 2024, with exceptions	Plan establishment date and exemption attributes; default rate and escalation schedule; notice deadlines
Sec. 127: pension-linked emergency savings accounts	Optional Roth emergency savings accounts linked to the plan, with a contribution cap	New account type, contribution cap tracking, withdrawal handling
Sec. 115: emergency personal expense distributions	Optional penalty-free distribution of up to $1,000 per year for emergency expenses	Distribution type, annual frequency rules, repayment tracking
Sec. 110: student loan matching	Optional employer match on qualified student loan payments	Certification data and match calculation outside payroll deferrals
Sec. 107: RMD age	Required beginning age raised to 73, and to 75 later	Date-of-birth-based RMD age rules

Some provisions are optional plan features; others are mandatory for affected plans. Effective dates and details come from the statute and IRS guidance, which continues to be issued, so check the current position before implementing.

New data you need from sponsors

Prior-year FICA (Box 3) wages per employee, for the Roth catch-up rule.
Reliable dates of birth, now driving three different age-based limits.
Hours by year for several years, for long-term part-time eligibility.
Plan establishment date and any auto-enrollment exemption.
Optional feature elections per plan (emergency savings, student loan match, emergency distributions).

Collecting this through a census template with validation is far cheaper than chasing it at year-end. See contribution and payroll processing.

Design principles for SECURE 2.0 rules

Rules as dated configuration, so provisions can be switched on per plan year and limits updated annually.
Payroll-time validation that flags, rather than silently fixes, contributions that break a rule.
Exceptions to people with the reason shown, and the decision recorded.
Plan-level feature flags for optional provisions.
Deterministic code for statutory limits; never an AI model.

Track status per provision

Be explicit about what your systems do today. KinetiPlan publishes a status per SECURE 2.0 provision: its census already holds age and hours, and Roth catch-up, long-term part-time and auto-enrollment payroll rules are proposed for pilot scope. That kind of plain status table helps sponsors, auditors and your own staff.

General information for plan professionals, not legal or tax advice.

References

Written by the Software Home engineering team, which builds 401(k) software and the KinetiPlan platform; we have an interest in some of the choices discussed. General information only, not legal, tax or investment advice.