Client Alert: Employee Benefits/Executive Compensation and Tax

For the second time in recent years, Congress passed broad legislation with far-reaching impact

on retirement savings programs. The SECURE 2.0 Act of 2022 (SECURE 2.0) was included as

part of the Consolidated Appropriation Act, 2023, which was passed by Congress on December

23, 2022, and signed into law by President Biden on December 29, 2022. SECURE 2.0 builds

on the changes made to the retirement system by the Setting Every Community Up for

Retirement Enhancement (SECURE) Act enacted in 2019.

SECURE 2.0 is largely designed to enhance access to retirement savings vehicles and make it

easier for individuals to save. It is also aimed at streamlining administration and reporting

requirements and preserving retirement income. Many of the changes do not take effect until

2024 or 2025, but some provisions will impact plans in 2023. Most plans will be impacted by

SECURE 2.0 provisions. It is notable that SECURE 2.0 does not include major tax provisions or

extenders.

The following is a high-level summary of some of the more consequential provisions of

SECURE 2.0.

  • Automatic Enrollment Required . Requiring certain new 401(k) and 403(b) plans to include an automatic enrollment feature with a default rate between three percent and 10% of compensation and an automatic escalation feature of 1% per year up to a maximum between 10 and 20%. This requirement is effective for plan years beginning after December 31, 2024. Employees have the option to opt out of automatic enrollment. Note that certain exceptions to the automatic enrollment requirement are provided to entities with ten or fewer employees, entities that have existed for less than three years, church plans, and governmental plans.
  • Saver’s Credit . The Saver’s Credit is modified from a credit that is paid in cash as part of a tax refund to a federal matching contribution that must be deposited into the saver’s retirement account. The match is 50% of retirement contributions, up to $2,000 per individual, subject to phasing out at certain income levels. The law also directs the Treasury Department to develop a strategy to educate the public about the match. These sections are effective for taxable years beginning after December 31, 2026.
  • Business Startup Credit . Effective for taxable years beginning after December 31, 2022. the small business startup credit for employers with up to 50 employees is increased from 50% to 100% and creates a new credit for plans other than defined benefit plans that is based on the amount of money contributed to participant accounts.
  • De Minimis Financial Incentives . Employers may offer de minimis financial incentives, such as low-dollar gift cards, to encourage employee participation in retirement plans. The financial incentives cannot be paid for with plan assets. This section is effective for plan years beginning after December 31, 2022.
  • Catch-Up Contribution Limits . Effective for tax years after 2024, the catch-up contribution limit will be further increased for plan participants ages 60 through 63. For most plans, the increased catch-up contribution limit will be $10,000 ($5,000 for SIMPLE plans), subject to adjustment for inflation. The annual contribution limit for individual retirement accounts (IRAs) is also increased for participants ages 50 and older. Notably, for tax years beginning after 2023, SECURE 2.0 requires the IRA catch-up contribution be adjusted annually for inflation, which was not the case prior to its enactment. In addition, for tax years beginning after 2023, all catch-up contributions will be subject to Roth rules, as opposed to only being subject to such after-tax rules when allowed by the particular plan. Notably, the mandatory Roth treatment for qualified plan catch-up contributions for those who earn more than $145,000 annually could be an unseen tax for high-income earners.
  • Required Minimum Distributions . Increasing the required minimum distribution (“RMD”) age from 72 to 73 in 2023 and to 75 in 2033. Beginning in 2023, the penalty for failing to take a required minimum distribution will decrease from 50% to 25%, and it will decrease to 10% if the individual corrects the shortfall within a two-year correction window. Roth accounts in employer-sponsored retirement plans will be exempt from the required minimum distribution requirements starting in 2024.
  • Roth Provisions . For taxable years beginning after the date of enactment, plan participants may choose whether matching contributions to a defined contribution plan are considered Roth (after-tax basis). The employee would have to be 100% vested in the matching or non-elective contribution. For taxable years after December 31, 2023, SEP and SIMPLE IRA plans may be designated as Roth IRAs. Contributions would be made on an after-tax basis with distributions excludable from income. The employee would be allowed to make this election.
  • Also, for taxable years after December 31, 2023, catch-up contributions to qualified plans, 403(b) or 457(b) plans would be required to be considered Roth (after-tax). This mandate only applies to employees with wages over $145,000. For those earning under $145,000, they may elect to treat catch-up contributions as Roth.
  • For taxable years beginning after December 31, 2023, 401(k) and 403(b) owners of Roth amounts within these plans are no longer required to take an annual RMD for the Roth amounts.
  • Changes for ESOPs . For sales of shares after December 31, 2027, S corporation shareholders may defer taxation on sales of 10% of the amount realized on sales to an ESOP for purposes of determining the amount of gain not recognized and the extent to which the amount realized on such sales exceeds the cost of qualified replacement property under Section 1042. This used to only apply to C corporations. Also effective after December 31, 2027, certain non-exchange traded securities may qualify as “publicly traded employer securities” if certain requirements are met.
  • SIMPLE Plans . SECURE 2.0 allows employers to make additional nonelective contributions under a SIMPLE plan, beyond the standard 2% of compensation or 3% of employee deferrals, up to the lesser of 10% of compensation or $5,000 (indexed). Also, contribution limits for SIMPLE IRA plans and SIMPLE 401(k) plans are increased. Both changes are effective for taxable years beginning after December 31, 2023.
  • Expanded Coverage for Part-Time Workers . SECURE 2.0 reduces from three to two consecutive years of service before long-term, part-time workers (i.e. employees who work at least 500 hours per year) are eligible to contribute to a plan. This also applies to 403(b) plans that are subject to ERISA. This section is effective for plan years beginning after December 31, 2024.
  • Student Loan Repayments as Elective Deferrals-Matching Contributions . For plan years beginning after December 31, 2023, an employer can make matching contributions under a 401 (k) plan or 403 (b) plan, or SIMPLE IRA plan for student loan payments up to the maximum deferral amounts. These matching contributions must have the same vesting schedule as any other matching contributions.
  • Emergency Withdrawals . Permitting one penalty-free withdrawal of up to $1,000 per year for “unforeseeable or immediate financial needs relating to personal or family emergency expenses.” The individual has 3 years to repay the distribution should they choose to do so. If they do not repay the distribution, they may not take another distribution for 3 years. This change is effective for distributions made after December 31, 2023.
  • Plan Withdrawals . SECURE 2.0 permanently confirms the ability of a plan participant to make an early withdrawal without incurring a ten percent penalty in the event of a federally declared disaster. This type of disaster withdrawal is permissible if made within 180 days of the disaster, if the participant’s principal place of abode is within the declared disaster area and if the participant/taxpayer has incurred economic loss resulting from the disaster.
  • After 2023, the Act also permits penalty-free withdrawals by a victim of domestic abuse, up to the lesser of $10,000 or 50 percent of the present value of the account.
  • Following the enactment date, a penalty-free early withdrawal may also be taken by an individual diagnosed with a terminal illness, within a period of 84 months after a physician certifies such diagnosis.
  • Starter Plan Designs . Creating “starter 401(k) deferral-only arrangement” and “safe harbor 403(b) plan” designs for employers who do not sponsor a retirement plan, effective for plan years beginning after December 31, 2023. There are also increased tax credits for small employers who are implementing new plans (up to $5,000 annually for the first three years).
  • Increase in Mandatory Distribution Amount . Increasing the mandatory cash-out amount from $5,000 to $7,000, effective for distributions made after December 31, 2023.
  • Retirement “Lost and Found” Created . Directs the Department of Labor to create, within two years after SECURE 2.0’s enactment, an online searchable database that will allow individuals with money in a retirement plan to search for the contact information of plan administrators to assist with locating missing participants and beneficiaries. The goal is to reduce the amount of retirement benefits that go unclaimed each year due to company changes (like mergers) or difficulty in locating employees.
  • Special Rules for Certain Distributions from Long-Term Qualified Tuition Programs to Roth IRAs (529 to Roth) . For distributions after December 31, 2023, taxpayers who had a 529 plan in place for a beneficiary for at least 15 years prior to the distribution, no tax or penalty shall apply on a direct transfer to a Roth IRA. The amounts that may be rolled over are subject to the annual Roth IRA contribution limit and the maximum that may be converted over a taxpayer’s lifetime is $35,000. No income limitation applies to these rollovers.
  • Charitable Distributions to Charitable Remainder Trust . For distributions in taxable years beginning after the date of enactment, a taxpayer may make a one-time $50,000 distribution to charities through charitable gift annuities, charitable remainder unitrusts, and charitable remainder annuity trusts.
  • Plan Amendments . Plans have until the last day of the plan year beginning on or after January 1, 2025 (or January 1, 2027, for governmental plans) to adopt amendments made pursuant to SECURE 2.0, as long as the plan operates in compliance with the requirements of SECURE 2.0 or the amendment as of SECURE 2.0’s or the amendment’s effective date.
  • Additionally, plan amendment deadlines under the 2019 SECURE Act, the CARES Act and the Taxpayer Certainty and Disaster Relief Act of 2020 are updated to the SECURE 2.0 dates.

This is a brief summary of some of the provisions in SECURE 2.0. These changes will likely

impact most retirement plans, so plan sponsors and administrators will need to monitor future

developments from the Department of Treasury and the IRS and be ready to implement the

various changes on the various compliance dates. If you have any questions about SECURE

2.0 or its requirements, please contact the author of this Client Alert Jeffrey Rambach, at (DD)

312-929-4425; (O) 385-355-4826 jeffrey.rambach@freemanlovell.com or your Freeman Lovell

attorney.

Disclaimer: This alert is provided for information purposes. It does not contain legal advice or create an attorney-client relationship and is not intended or written to be used and may not be used by any person for the purpose of avoiding penalties that may be imposed under federal or state tax laws. The information and explanations stated in this alert are based on initial consideration of the law after its enactment and may be subject to different interpretation of the law and its meaning and effect in the future.

By Adrienne Langmo September 30, 2025
As the federal fiscal year draws to a close, thousands of federal employees face an unsettling possibility if a continuing resolution is not passed: not just another shutdown and temporary furlough, but permanent layoffs through Reduction in Force (RIF) notices. This week, the Office of Management and Budget (OMB) instructed federal agencies to consider issuing RIF notices to employees (if certain conditions are met) rather than the usual temporary Furlough notices issued during shutdowns. This is a big shift. But it does not mean layoffs are guaranteed. If they occur, federal employees are protected by a robust set of legal rights. There’s still a process before a RIF can be properly issued, complete with notice rights, retention rights, appeal rights and such other rights that the OMB does not purport to usurp. That said, we understand that the anxiety of this uncertain moment is real. Here are some tips to best prepare for the unknown, come the end of the federal fiscal year: Download Your eOPF, ASAP o Your electronic Official Personnel Folder may become inaccessible during a shutdown. Download it now to preserve your employment records. Download Your last 3 Performance Appraisals, ASAP o Include mid-year reviews and commentary. These documents may affect retention rights in a RIF. Also save records of other awards, commendations, and other notable performance records. Save Key Communications o Save emails, memos, or notices from HR or supervisors about your employment status or shutdown protocols. Ask Questions o Supervisors, HR, and union reps are navigating this too. Don’t hesitate to ask questions. If you receive a RIF notice or suspect you were subject to procedural violations, don’t hesitate to reach out to us for our advice. We are here to help. Shutdowns may be political. Your livelihood is personal. Let us help you safeguard it. -Adrienne Langmo, Partner
By Adrienne Langmo September 12, 2025
If you're working for — or running — a business with under 50 employees, the Family and Medical Leave Act (FMLA) might seem like a distant federal regulation. But for eligible employees and covered employers, it’s a powerful tool for balancing work and life during major health or family events. Here's what you need to know. 🧩 The What The FMLA is a federal law that allows eligible employees to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specific family or medical reasons, including: The birth or adoption of a child Caring for a spouse, child, or parent with a serious health condition Recovering from a serious health condition themselves Certain military-related family needs The leave can be taken intermittently, in blocks, or in one long swath. During FMLA leave, employers must maintain group health benefits as if the employee were still working. When the leave ends, the employee is entitled to return to the same or an equivalent position. 👥 The Who FMLA is mandatory for employers with 50 or more employees within a 75-mile radius. So, if your business has fewer than 50 employees at a given location, you’re not legally required to offer FMLA leave —but you can choose to adopt similar policies voluntarily. Employees must also meet FMLA eligibility criteria: Worked for the employer for at least 12 months Logged at least 1,250 hours in the past year Work at a location with 50+ employees within 75 miles *State employees may have additional benefits provided under state law. Here, we’re discussing private employers and employees. 🛠️ Employer Takeaways Treating employees appropriately during their FMLA leave and upon their return can present some hurdles for employers and coworkers, particularly when an employee has been on leave for some time and, e.g., projects or programs have evolved in their absence. You don’t have to navigate these situations alone; we can provide your team with the tools and information necessary to smoothly navigate the full FMLA process and avoid any sticky FMLA retaliation or interference claims. And, even if you’re not legally bound by FMLA, offering comparable leave can be a smart move. It builds trust, boosts retention, and shows you value your team’s well-being. Consider crafting a voluntary leave policy that mirrors FMLA protections, including: Clear eligibility rules Defined leave duration Job protection guarantees Coordination with paid time off or disability benefits For small businesses, this means you have flexibility—but also responsibility to communicate policies clearly. Want to overhaul those policies or craft great messaging to your team, give us a call! We’re here to make leave policies less painful and more practical. 📣 Employee Takeaways If you work for a small Utah employer, ask about your company’s leave policies. While FMLA doesn’t require you to use your accrued leave during your FMLA leave, it allows your employer to write into its policy a requirement that you do so. Make sure you read that policy! And, even if FMLA doesn’t apply, your employer may offer benefits similar to FMLA. If you’re dealing with a serious health issue or family emergency, document your situation, give notice as early as possible, and follow internal procedures. Need help understanding those procedures or your rights as an employee? We got your back! ⚖️ Final Thoughts FMLA is more than a legal acronym—it’s a lifeline for employees facing life’s biggest challenges. For Utah employers, understanding the law and choosing to offer similar protections can set your business apart. Whether you're an HR manager, CEO, or a team member, knowing your rights and responsibilities helps everyone navigate leave with clarity and compassion.
By Adrienne Langmo September 3, 2025
So, you’ve got an employee that wants to teach a night class? Drive for a ride share? Pursue a passion project on the side? That’s great…. Right? You can ensure it’s great for both you and your employee by entering a non-compete, non-solicitation, non-disparagement, and/or non-disclosure agreement and setting clear workplace boundaries . Non-Compete Agreements can help employers do damage control when an employee wants to branch out. Non-competes alone are limited, but when properly crafted and paired with the other agreements listed above, they can provide peace of mind and protection to employers. Utah law takes a close look at these agreements when it comes to enforceability, so don’t go it alone when it comes to crafting one. Boundaries Set boundaries with your employees on the use of their time, your equipment, and your company’s other resources like client lists or IP. And pay close attention with remote or telework employees where boundaries may be squishier. Here’s some examples where lines may get blurred: Can the employee use the office printer, or their allotted printing budget for their teaching gig? What if it’s just a couple sheets of paper? What if it’s their 100-page course outline? Maybe. Do you have an equipment policy that allows employees minor personal usage of the office equipment? Does it define “minor”? Might you want to update that policy if it doesn’t provide the clarity you need? We can help! Can the employee pick up a ride share client in the company vehicle while they’re out running an errand for the company What if it’s their personal vehicle? What if the trip is along the way, no deviation? Definitely not the company vehicle for insurance purposes of carrying a random person around. But otherwise, this raises the charmingly titled legal doctrine of “frolic and detour” where it is much less messy in terms of liability (for accidents, etc.) if the employee does not engage in personal errands while on the clock, when they’re supposed to be completing your company’s business. No double dipping. No frolicking, as tempting as frolicking sounds. Can they email one of the company’s clients with a question that’ll help them move things forward on their side project? Generally, probably not, especially if you have a non-solicitation agreement in hand. But, it may depend on more details than this scenario offers. When in doubt, talk about it with your employee, get an idea of what their end game is, and give us a call if you need a sounding board. Need help handling questions like these, updating policies, or putting together a non-compete agreement? We can help!