Secure 2.0 and PeopleSoft: What You Need to Know

If you manage the PeopleSoft system for your company, you’ll need to be aware of critical changes coming with Secure 2.0, a congressional bill that includes 92 provisions related to retirement savings plans. 

PeopleSoft will release updates to address a few of the provisions, but most changes will be directly handled by you, as the employer.  

Provisions Currently Being Reviewed by PeopleSoft 

• Section 603 – Identify FICA Limit for ROTH Catch-Up – Effective 01/01/24 
  • Age catch-up for 415c limits 

• Section 109 – Adding Age Limits – Effective 01/01/25 
  • Will be provided as a PRP 

Note: The changes within PeopleSoft cannot be released until the IRS publishes final guidelines and FAQs. Stay up to date on the latest information by reviewing the Secure 2.0 Position Paper and listening to the PeopleSoft Chat Podcast.  

Section 603 – Roth Treatment Required for Certain Catch-Up Contributions 

Starting in 2024, the Secure 2.0 Act requires all age catch-up contributions to 401, 403, 457 plans for workers with wages over $145,000 during the previous year to be deposited into a Roth (i.e. after tax) account.

Employees with compensation of $145,000 or less are exempt from this requirement. 

This change is mandatory, and it is effective for taxable years beginning after Dec. 31, 2023. 

Considerations for Section 603 

The following should be considered for Section 603:

• Employee contribution 
• Customer is running Payroll for North America 
• Customers are using Ben Admin 

*For customers using Payroll Interface or only Base Benefits, there will be manual steps involved. 

Anticipated changes with Section 603 

1. FICA Earnings Threshold Setup on Limit Table 
2. Process to identify Employees 50 or greater who have prior year’s FICA earnings over $145,000
   • New ROTH Threshold Checkbox fields on Benefits Savings Management 
   • Updated App Engine (AE) program for customers using PNA 
3. Process to create BAS Activity Trigger so Employees can enroll into Roth Catch-up 
   • New BAS Activity Action fields on Benefits Savings Management 
   • Updated App Engine (AE) program for customers using Ben Admin (The rumor is that every employee eligible for a ROTH catchup will have to do a positive election. You can’t just roll them over. This is not finalized yet.) 
     • New checkbox for positive election, even if it’s not officially required. This ensures employees understand it’s going into ROTH, not a pre-tax. 
4. ROTH Rollover Setup 
5. Deduction Calculation to rollover employee’s age limit catch-up contribution 
   • Look for the checkbox on the Benefits Savings Management so they know they’re over 50. Then, use the deduction calculation to determine whether the person has prior year FICA earnings. 

Section 109 – Adding Age Limits 

Until now, the Limit Table included only one maximum yearly deduction. With the release of Secure 2.0 provisions, PeopleSoft will add additional limits to this table.  

The anticipated age limits are 50, 60, and 64, but this will not be finalized until the IRS releases official guidelines. Amounts will change every year for each age, and you will manually add the maximum yearly deduction and age limit. (Age limits will change based on the IRS.) 

This change is mandatory, and it is effective Jan. 1, 2025. 

Considerations for 415c 

There will be an addition of a 415c age catch-up limit.

Logic to Determine Prior Year FICA Earnings from PNA 

You will likely need to wait until the end of the tax year to know which employees are impacted by the new limits. Payroll and benefits teams will need to work together to make sure they know when someone has a change, especially after running this for the first time. This may require W-2c corrections or other year-end adjustments. 

Key Takeaways 

Once the IRS releases all of the guidelines and FAQs for the Secure 2.0 Act, the PeopleSoft Release patch set will begin. Stay informed and proactive now, and you’ll ensure a smooth transition and compliance with the new regulations.  

To learn more about the impact of Secure 2.0 on your PeopleSoft system and get a sneak peek at screen changes, the following presentation by Tammy Boyles, PeopleSoft Product Management Director, Oracle: SECURE 2.0 – Hot Topic.