Federal Tax

SECURE Act Increases Max Amount of Employee’s Compensation

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) increased the maximum amount of an employee’s compensation, from a 10% cap to a 15% cap, which can be automatically deferred to an employer’s 401(k) plan after the employee’s first plan year. In Notice 2020-86, the IRS has provided additional guidance in the form of Q&As with respect to the increased cap. In addition, the Q&As cover the elimination of certain notice requirements for plans that provide for safe harbor nonelective contributions and the retroactive adoption of safe harbor status for those plans. Contact us with questions. © 2020