The Consolidated Appropriations Act of 2023 (“Act”) was passed by Congress in late December 2022 and signed by President Biden on December 29, 2022. The Act, a $1.7 trillion dollar spending bill, contains provisions which modify the laws applicable to welfare benefit plans and retirement benefit plans. Below is a high-level list of the provisions of the Act which are effective in 2023 and which may affect your plan:
Welfare Benefit Plans
- High Deductible Health Plans can continue to waive the deductible for any telehealth services for plan years beginning before January 1, 2025.
Retirement Benefit Plans
- The age for required minimum distributions is increased to 73 starting on January 1, 2023, and age 75 starting on January 1, 2033.
- Employers may now offer de minimis financial incentives to employees to participate in 401(k) and 403(b) plans.
- The early distribution 10% percent tax will not apply to distributions for participants with a terminal illness.
- Plans may allow participants the option of electing to receive matching contributions on a Roth basis.
- Employers who (a) offer eligibility for military spouses within two months of hire, (b) qualify military spouses immediately for any matching contributions, and (c) vest employer contributions at 100% for military spouses, will receive a tax credit.
- Repayment of qualified birth or adoption distributions must be limited to 3 years. Before the Act, the repayment term was not limited.
- Participants in governmental 457(b) plans are no longer required to request changes in their deferral rate prior to the beginning of the month in which the deferral will be made.
- Employers may participate in multiple employer 403(b) plans.
- Employers joining a multiple employer plan are eligible for a startup tax credit for 3 years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.