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ARTICLE · 09 JANUARY 2023

SECURE 2.0 Act And Its Impact On Defined Benefit Plans

Reinhart, Boerner, Van Deuren SC
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In our prior alerts, we introduced the SECURE 2.0 Act of 2022 (SECURE 2.0 or the Act), a portion of the Consolidated Appropriations Act.

United StatesEmployment and HR
Joshua H. Hernandez
Joshua H. Hernandez
Martha Mohs
Martha Mohs
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In our prior alerts, we introduced the SECURE 2.0 Act of 2022 (SECURE 2.0 or the Act), a portion of the Consolidated Appropriations Act. We discussed key provisions applicable to all qualified retirement plans, as well as provisions applicable to only defined contribution plans. This alert, the final alert in our series covering the retirement plan changes included in SECURE 2.0, summarizes provisions applicable only to defined benefit plan sponsors.

Reasonable Interest Credit Under Cash Balance Plans. The Internal Revenue Code provides that interest credit in a hybrid-defined benefit plan must not exceed the actual market rate of return unless the plan uses a reasonable, fixed-interest credit. The Act clarifies that an interest credit rate that does not exceed 6 percent is deemed to be reasonable for this purpose. This provision is effective for plan years beginning after December 29, 2022.

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