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- [00:02]
A
You're listening to ASBO International's School Business Insider. I'm your host, John Brucato. Each week on School Business Insider, I sit down with school business officials and industry experts from around the world to share their stories and explore the topics that matter most to you. Find out what it means to be a school business official and get your insider pass on all things school business. Hi everyone, and welcome back to School Business Insider. In early 2024, I sat down with Michael Linehan, Sarah Bryner, and Phil Hahn to discuss The Secure Act 2.0, a major piece of legislation that reshaped how public school retirement plans operate. Back then, we were previewing what was coming. Now, nearly two years later, those changes are no longer on the horizon. They're here. In this episode, we'll Revisit what Secure 2.0 means for school business officials now that many of the mandatory provisions are taking effect. We'll cover what districts need to prepare for, where there's flexibility, and how plan sponsors and employees can stay compliant and informed as implementation becomes reality. Well, welcome back, everyone. Glad to have you back on for a follow up to our original episode. Glad to see you again.
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B
Thank you for having us.
- [01:23]
C
Thank you, John. Thank you for having us.
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D
Yes, thank you, John. It's great to be back.
- [01:28]
A
Great. So as I said in the intro, we spoke almost two years ago now on Secure 2.0. That was still something on the horizon, as I said. So how has the conversation changed now that we're kind of facing what secure 2.0 has for school districts here in late 2025?
- [01:44]
B
You know, as we look at it from the employer and the TPA perspective, we're kind of almost rounding home plate, you know, where two years ago we were probably between, you know, first and second. You know, a lot of the been implemented and we've been talking about it, you know, but of course, as we move on to the horizon in 2026, kind of the biggest. I know we're going to discuss it later. The biggest provision is something that's going to be implemented that, you know, has taken that long amount of time, the two years this to to be able to implement this in 2026. Mike, you have anything?
- [02:28]
C
Yeah, you know, a lot has happened. I think we all would agree. I think that the Secure, remember now this is we've had Secure One and we've now are imp. Have been implementing Secure Two since 2023 and there have been provisions that have been implemented over the course of the last three years. Some of you may not have noticed some of these changes. Some of you may have. Sarah is representing Omni, tsa, cg, I'm representing Equitable and Phil Hahn is representing Security Benefit. We certainly have seen these implementation, the implementation of Secure 2.0 over the course of the last several years and that's certainly why we're here today. You may ask yourself, really, I'm not sure I've seen any changes. And some of you may say, well, I have and I think that these changes are important to understand. There are many, many. Now let's, Let me, let me, let's ground ourselves when someone talks about Secure 2. Oh, they've affected every retirement plan that's in the marketplace today. That's. And many of them don't apply to us in the, in the government, in the tax exempt government marketplace. So let's be very careful. There are many of these provisions that affect the 401k ERISA world. So you might say, oh I like that provision. I just heard of it. No, well, timeout. Some of those provisions don't apply to what we do every day. In regards to 403B, 457 and 401A's, some of you might have a 401AMany of us have, if not all of us have 403bs and 457s. So let's, let's ground. You know, John, I want to make sure everyone understands there. I think there were, oh my goodness, if I remember correctly, over a hundred provisions in this plan, in this, in this legislation and not all of them affect us in this, in this public education marketplace. So what we're going to, we'd like to do is let's go through maybe some of those provisions, most importantly the ones that are mandatory and then we can get into some of those optional. But Phil, introduce yourself. Welcome.
- [05:02]
D
Yeah, I appreciate it. We fell on with Security Benefit. We appreciate the opportunity to be a part of this again. And just like Mike said, I think there's been a lot that has gone on over the last few years and will continue to go on that we'll allude to in the end of potentially it's always evolving space that employers and employees. But employers are getting challenged of how do they manage their retirement accounts. And it comes up with a lot of questions and as Mike alluded to, this started a few years ago just like Sarah did with some. You know, we'll talk about the RM. Current provisions are going to take place on January 1 of 26 that may or may not affect every school district as well, so we'll look forward to sharing some of that with you here over the course of a little bit today. And you know, thank you for the opportunity. Appreciate it.
- [05:58]
A
Absolutely. So as Michael said, you've been working on implementing Secure 2.0 since as early on as 2023. It's quite a Runway now that we're at the tail end of 2025. What has really been the biggest shift you've seen in terms of district awareness and readiness? Michael, you alluded to it a little bit. Some people know right away when they hear Secure act that's been affecting them and others could be like, what is that? So what has really been like the temperature out there?
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C
I'm seeing some districts are very well prepared and I'm going to be very honest with you, they should. It depends on the relationship they have with their TPA and those that have a good relationship with their TPA and have a tpa. There are some districts that may not. I think this is a good opportunity for them for a district to re to revisit some decisions on whether or not they have or have not secured a relationship with a with a third party administrator a la Omni tsacg, one of the best in the industry. So the districts that are feeling very comfortable with the implementation of these changes and how it is affecting them in this, the decisions they need to make has been really based on the TPA that they're working with. So I think those conversations have given confidence to the districts that have a great TPA that have been in communication numerous times, I'm sure over the last few years. And for those that are not, you're hearing some concerns. Is there a lot to do? I don't want to make a mountain out of a mobile. No, there's not a lot to do. But there are some provisions that are mandatory that are going to be requiring some changes potentially to your payroll system. When you are now being asked now to provide a Roth contribution, which many of you have, may not have Roth as an after tax form of contribution by your payroll system, that may be a heavy lift. That in itself may be a change that may require some work on your on your behalf. Some of the others are just going to be going to be awareness when you change the RMD to a higher age, does that really affect what you do and what your payroll folks are doing on a day? No, it's not. So some of these more of information and some are going to require some next steps for you.
- [08:47]
B
And Mike, I think you really hit the nail on the head of is that you need to know what Parts of Secure 2.0 apply to your plan and how do you know that really should fall on the tpa? Because as Mike has alluded to, there is a lot of secure 2.0 provisions that do not impact the governmental K12 space. So it is important that you have an eligible third party administrator or just a consultant, someone that will help you navigate to make sure that the provisions that are applicable to the governmental K12 space really applies to them. And then how do you implement it and was it implemented properly? And you know, I think Mike, you, you touched on it and that various third party administrators have, you know, kind of crafted how they've done the administration of Secure 2.0 and then their clients have said, okay, I agree with that, or not agree with that. So these decisions have been made and it's just the continual awareness that really falls on the responsibility to make sure that the employers are aware of the provisions that impact them and when it impacts them and how much it impacts them.
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A
So I know this is hard to believe, but there may be people listening today that may not have caught our original episode. So before we dive into. I know, right? This is shameful.
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B
No way.
- [10:26]
A
We're going to spend a lot of time talking about mandatory provisions because that's going to be a crucial element in terms of what school business officials and school districts need to be aware of. But before we do that, can you just give a brief refresher, a quick refresher on what Secure 2.0 is and why it matters for school business officials.
- [10:44]
B
So sure, I can confirm a quick reading in2022 secured triple and like Mike said, it's a massive bill and it contains some significant retirement plan new features, the governmental space, such as giving new distribution options with respect to FEMA and loans and easing administrative burdens such as doing a self certification for hardship distributions. And then because the federal government I think took a step back and so now that we sit here in 20, I guess 2022 or 2020, whenever they were looking at this, how does the life of retirement plans look like now? And I think it really was a big signal. And Phil and Mike, I'll turn it over to you to show that the is watching is ready to step in and do some things to make sure that it's better and better for everybody. And you know that there was a secure 1.0, there was a secure 2.0 and that they're going to continue on with the secure 3.0. And continue on, you know, with purpose to make retirement plans, retirement plans better.
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C
This is a bipartisan legislation. The vote on to approve this was, you know, I don't think very few legislators said no to it. And why, I think we have seen in our industry that the need for saving on a voluntary basis is becoming more important today than it was over the past years. It was still important maybe then we just now know how more important it is today. And I think we would all agree on this call that again, those that have prepared for retirement will come to retirement and they look to their state pension and they'll ask themselves is this going to help? Is this all I have for retirement? Not to put negativity on that, but they have found that they're spending more and need more. So the IRS has recognized this. So they're trying to make these, with this legislation you're starting to see a number of changes to it because they've listened to the, to the, to our industry and there are more in service distributions than we probably need. And one might say is they're defeating the purpose of saving for retirement if they can get further access to their dollars while they're working. And I wouldn't disagree. There's a balance there. But the need or the ability to take that distribution if in need is, is what gives many, many of us that more of that comfort that if I do need it, I can get access to it. So many of these provisions are as Sarah mentioned in reference to allowing for more in service. The rest of these provisions again are needed for a number of reasons. Some of them are very self serving to the irs. They are and we'll, we'll get into more of those details. Some of the, the requirement that now if you are an, a high income earner in our market, 145,000 or more of FICO wages. And I say that for many of you where they're sitting in a state where potentially you do not pay into Social Security, this provision really doesn't apply. But for those states that do 145,000 fico wages, those individuals, when they want to do a catch up now it must be Roth. This is where, where this provision was a little bit more self serving to the IRS because they needed some way of generating some income to pay for all these wonderful other opportunities that they just gave us.
- [14:47]
A
So they want their taxes now.
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C
You know, John, sometimes you got to read between the lines and that's, you know, there. But let's not, let's not forget all the great things that this legislation does have to offer, but this one, it was a little bit for us to understand the why. Couldn't understand the why, other than the fact that it's a good revenue generator for the irs.
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A
So let's talk mandatory provisions then. There are many and I'm hoping that this team. You can walk me through some of the most critical ones. You, you had recently done a presentation to Connecticut asbo. Some of the highlights were the required minimum distribution, age to 73, elimination of RMDs for Roth accounts, student loan match provisions and a few others. Can you run through the heavy hitters and why they're relevant to school business officials.
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B
So the mandatory ones first would be the RMD which is a required. Before Secure 2.0 it was 72 and now they raised that age to 73. The second is the elimination of the first day of the month rule. Okay, what the heck does that mean for a lot of you that have a third party administrator means nothing. So before Secure 2.0, for some reason, which I'm not really quite sure, the 457 had a special point, a special rule that indicated that any SRA salary reduction agreements that were implemented certain calendar month could not be started until that next calendar month. I think maybe initially it was because they wanted to put, they were putting rails around making sure that that money got in within that whatever month period. But now we sit here in 20, 20, 24, 25 where that is way too long. You know, we're prohibiting the amount for, for participants to be able to save. So that was just really kind of a recognition of clearing that rule out to allow 457 contributions to be contributed immediately upon execution of that sale. Just like they are in 403 land. The third one is Mike or Phil. Help me, what is the third one.
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C
Eliminates the RMD distributions for Roth 403 and 403.
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B
This I call as the common sense vision is why would you have, why would you require a participant who had a Roth account? Irs, you've already gotten your tax money to take money out of your retirement account. The IRS isn't getting any more tax money. So I think it was just kind of recognition of this seems like such an irrelevant type of provision. So it was really just eliminating that requirement that anyone that these required minimum distributions had to go into the or you had to do an RMD on a Roth one. And then the last and final one, which is the star of, I think it might be more of a nightmare or a thriller, is the mandatory Roth Age catch up contributions, which says in 2026 is when this must be implemented, that any employees earning 145,000 or more in FICA wages, like Mike said, very, very important, will be required to contribute any age catch up contributions as Roth. So I think we're all set. We can just kind of turn off the podcast. We're good. That was very easy.
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A
Yeah, right, right. Well, thanks for tuning in, everybody. Catch us next week.
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C
Thanks for tuning in.
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D
And then as I was going to say, as Sarah alluded to, I mean, then we add the twist as Mike said, that it's FICA wages. The challenge for a lot of those states that do not pay into fica, what are we supposed to do? How are we supposed to do it? And it's defined as FICA wages in the previous calendar year. So that'll be 2025's earnings for 2026. So that is becoming a challenge, which, you know, Sarah, being in tsa, Omni CG on the line here that this is where a lot of the school districts have made the decisions to if they didn't have a TPA to look for one for their help.
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A
So tell me a little bit more. How are these provisions impacting school districts operationally? I think Phil, you kind of alluded to, you know, with these provisions, those districts who may have had a TPA are now seeking them out. But what changes are required at the payroll or administrative level operationally for school districts?
- [19:49]
D
Well, I think you know what we've seen a lot of them have been asking because they haven't had Roth provisions in previous years is the first limitation is trying to get Roth available for all patients. But now that it's mandated for those employees or earn over 145 and there may not be a lot in your district, but it only takes one or two that's required for this age based catch up. And I guess we'll make sure people are clear on that. When we're listening is what we're talking about age based is they can 2025. It is a 23,500 limit for any age. And then from age 50 and above, outside of the new caveat that's optional is a 7500 age based 50 catch up. That is the one we're talking about that must go to Roth if you make more than 100 and depending on if they add the optional which we'll get into soon of the optional 60 to 63. Don't ask me why it only stops at 63. But age 60 to 63 special catch up.
- [20:54]
A
So provisions like this, I mean we talked about the IRS wants their money now, but do these provisions how they're written in law, do they sunset is this kind of in perpetuity, Does Secure Act 3 change any of this or is this kind of set in stone for the foreseeable future? I see as Sarah had mentioned, the Roth on the ketchup is probably the biggest one that's going to impact people in their contributions.
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B
I don't think Roth is going away. We heard kind of the rothification, we heard that a lot is that term rothification. I don't think Roth is going away and frankly it shouldn't go away. It should be a benefit and an option in every single voluntary retirement plan or in every retirement plan across the country. It a very important contribution type that needs to be available to employees at different parts of their career. But I do not think that this provision is going away and I think there will be more provisions of the like. While this is difficult provision and I'm speaking of just the Roth mandatory age catch up provisions or contributions is it is such a difficult thing to administer and implement and what I think the government is going to find out that they're not going to get a tremendous amount of tax revenue from it as we look forward and you know, into secure 3.0. Mike, anything to add?
- [22:26]
C
Sarah? I think we look at our enrollments, our Gen Z's, our generational teachers coming into the industry today and certainly understand and appreciate I'd rather pay tax now than take tax later. So Roth has become extremely popular from that perspective. And I would agree with Sarah. I do think we're probably going to see some further changes along the same lines John, as we look at how these will be implemented going forward. So again a good question you've asked is, you know, how are these being implemented? One might even think is what has a district done maybe that they don't even realize that they've done. Remember now the mandatory provisions, you don't need to update your plan document until when Sarah, when does the actual plan document have to be updated with all this stuff?
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B
Not until 2029 for governmental plans. So that and that includes all your mandatory and Your optional secured 2.0 provisions.
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C
There you go.
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B
That's different than having your plan allow the Roth feature. Two very important things is that if you want to implement Roth that Roth feature you have to update your plan document. But the plan document amendments that are associated with Secure 2.0 are not required to be updated into 2029.
- [23:57]
A
So you're saying that school districts between now and then don't necessarily have to jump on this right away. They have time to implement it or do they have to implement it 1-1-26. It's just a plan document thing.
- [24:09]
B
Correct. They have to implement it in the effective dates that have been laid out specifically with respect to this mandatory Roth age catch up contribution requirements that has 2026. But the plan document doesn't have to mirror, doesn't have to have the special language in it until 2029.
- [24:30]
A
Got it.
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B
And I think, John, you really touched on a great part because there was a recent IRS guidance that was just kind of introduced in September. It laid forth a lot of guidance, final guidance on the mandatory Roth provision. And at the end it did cause some confusion because it indicated that 2026 is an administrative period and there was some question about whether that this mandatory was pushed out into 2027. And it really has been clear that everything is supposed to go into effect in 2027. 6. But you're getting kind of a, a compliance pass, a good faith, reasonable compliance pass for 2026 RSSI insofar as they're letting the IRS is saying we're going to give you a year, you have to implement it. But to work out all the kinks, so to speak.
- [25:31]
A
I feel like that could be confusing, maybe more so for the employee because if you, you're required to implement these new mandatory provisions without updating the associated plan document. If an employee references that document, they're going to see a discrepancy in terms of what's actually happening from deductions on their paycheck versus what their plan document says. So are you advising districts, you might as well update it now if you have the capacity just to maybe get away from any other further confusion.
- [26:03]
B
Unfortunately, no, because the IRS has IRS pre approved plan document and so the IRS has to issue special IRS language approved language that has to go on these plan documents. So we don't necessarily say go and implement your or restate your plan document. However, you should update your policies, your procedures, your communications, your administrative procedures that go along with that because that really reflects how you're doing the plan from 5 or 2023 to 2029. So if you're audited now, you know, we could say here are the plan provisions, here are all of the communications that were given that how we're dealing with these provisions. And that's how we've implemented it throughout, throughout the plan.
- [26:59]
A
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C
Yeah.
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D
And John, I think it's what Sarah brings up is an interesting point to make sure you are documented it, but make sure people know where that documentation is because there's a lot of changes that happen a lot in these schools where you have new administration comes in and, and especially going down the line over the next few years. Extremely important to know what has taken place by your predecessors that you need to make sure you're continuing going forward from this district because it would be a, it could be a lot different from where you just came from as well.
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B
That's a great point. You know, the people that come after you.
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C
Maybe with folks we should also get into how have decisions been made made on the optionals mandatory. It seems rather clear those mandatories are going to take place. The document doesn't need to be updated to support those decisions, but they are effective in the year that 23, 24, 25, 26. So Sarah, from a TPA perspective and I, you know, we had again a group call of a few TPAs about a couple of weeks ago with Casbo and one of the topics we talked about was how did you make decisions and communicated those decisions on behalf of the district in regards to the optional provisions? Because there are a number of optionals. I think there's about 12 of them or so and we can go through a few of those. How did TPAs from your perspective, how did you handle it with your clients. And do you think that that was a common way of handling it by others?
- [29:48]
B
You know, I think from Omni TSA's perspective, we wanted to make sure that all of our clients were able to take all of the Benefits of Secure 2.0 and the features have available, you know, within administrative, you know, the administrative capabilities, being able to do that, you know, so what we did is we sent out general releases and communications that indicated this is how we are going to administer the option of your plan. We would outline the provision and how we planned on whether you were quote, unquote, opting in or opting out of the plan or out of the feature. If a client did not want to do the recommendations that the Omni TSA decided to move forward with, they would contact us and then we would notate that in their plan document and then their operations. But I just think it's really clear that the TPA communicated how they were going to handle the optional provisions and that the client had the ability to or opt out to those third party administrator decisions. And I would have to say that I think all third party administrators across the country that are in this space that I know Mike in Philly, and correct me if I'm wrong, really pretty much did the same thing. You know, they really looked at each provision to say, how can this help? How can we help this for the employee, for the employers and making that available. So.
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A
Well, it sounds like a lot of the optional provisions are specific means in terms of accessing those funds maybe earlier than they are intended. You know, some of the bigger ones are FEMA, disaster, emergent personal expense, domestic abuse, employer Roth contributions, all means of which under certain circumstances, an employee can access those funds early. Talk to me about how those decisions are being made locally at the District. This is just kind of, why wouldn't we say yes to all of these? Because it's nice to have more options for employees. It's, you know, other features. Is there hesitance in terms of could there be potential fraud with trying to access these, these funds early? Is the district on the hook for any of this? What are those conversations like at the district level for employers looking to maybe opt in and, or opt out of these, these optional provisions from, you know.
- [32:19]
B
From what is a third party administrator? We see the employers overwhelmingly take advantage of the optionable provisions to be able to permit their employees to utilize those provisions. You know, but you're, you know, you're right, John, is there is extra security and extra things that could happen and that is really just dependent constant of sharing information is to make sure that know that's confidential and we're making sure that we're looking at it and having the security right as. As we're looking at these provisions. But I just also think it makes it more of a reason to make sure you have a third party administrator or someone that is doing that on your behalf to make sure that they're doing it in the right way.
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C
You know what I see John? I see another. I see a similarity to years ago many. I've been doing this for close to 25 years and what I've seen is that when there is new legislation I always would say to a district walk before you run. What do I mean by that? There's. There's some wonderful provisions that have been offered but there still needs. We're all talking about them still allowing individuals to self certify for hardship withdrawals. John, that's a mouthful. We got to be very careful. There's some good and there's some good things that could happen and not. So I think what we, we. I think many are are doing is let's walk before we run to saying no today doesn't mean you can't say no tomorrow. And you can say saying can't say yes tomorrow. So you can say yes tomorrow. At any point in time of some of these additional provisions. I do think and Sarah is right, we as an industry are still absorbing these and are learning and still administering how we're going to administer some of this. So take a time out. I think we these will be adjusted. You'll learn more about them. The industry will come to maybe a better idea of whether or not it's time for some of these provisions. And at any point in time if let's say a teacher comes to you and says hey I want this qualified birth and adoption distribution okay, guess what we can modify the plan but right now I don't think the marketplace is yet knows enough about them to where they're finding out how to use them. Another thing is that I do think as we get more comfortable with these additional provisions it's going to be an opportunity for a school district to those that do and those that don't to use them as opportunities for recruiting and retaining of employees. These there's some very attractive features that again will start you'll be able to compete with other school districts on enhancing this benefit beyond and above and beyond what we currently.
- [35:10]
D
Yeah, no, I mean exactly that. I mean I definitely want to add that this with these Optional and the provisions the school districts really have to figure out, how can you feasibly manage these, especially if you're doing it yourself? Because you need to document this, you need to keep track of what is going on because there are provisions that, there's one that's out there that's optional that permits employees to withdraw $1,000 a year penalty free family in emergencies, but they could pay it back up to over three years. So as an administrator, you've got to figure out how you're going to do that. Again I'll go back. If you don't have a third party administrator that's helping you, this is a tough provision if you're not having that administrator because somebody really now for somebody to take care of these for you.
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C
That's a great point, Phil.
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A
I wonder too if the optional provisions will be somewhat contingent in terms of employee demand. So one that comes to mind, I mentioned the FEMA disaster distribution where I'm located in the Northeast, we're nowhere near as hit by FEMA related events as maybe like Florida or Louisiana or the Midwest with tornado. So I'm wondering would there be a higher demand from employees to have access to those funds for FEMA related events and would the employer respond in kind and say yes, this kind of makes sense because we're in tornado alley, we're higher. There's a more likelihood of us having to access funds because of a FEMA event rather than like the Northeast or something like that. Are you seeing kind of decisions being made and I wouldn't say reactionary but just really in response to employee demand?
- [36:52]
B
Yeah, absolutely, absolutely. I think you know, if it's your based on your own experiences but also you know, just New York State, you have Long island, you know that, you know, so there in almost any. It can, it could impact really any state if you look. But exactly to your point John, you hit the nail on that is it does matter where you live and where your, what your personal experiences are of what your temperature is for these.
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A
Yeah to Michael's point, kind of walking before you run, maybe just responding to employee demand rather than just saying carte blanche, we'll opt into all of them.
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C
Right.
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A
So we talked a little bit about communicating effectively, not waiting to update your plan document. So tell me, what is the best way school business officials can best educate their staff about these changes without really overwhelming the employee? Because it's even just talking to you now my head's kind of spinning a little bit. But you know, your average employee who really isn't dialed into this stuff, I can only imagine what this really means to them. So what's the best way to educate staff on all these provision changes category?
- [38:02]
B
You know, one of the main things that we've gotten as this, as we're getting closer and closer to the end of 2025 is employers saying, well, do I really have to abide by this rule if I don't have anyone that's making over 145,000? And it's yes, but it's just, how are you going to get this information to the employees? So it's really just break it down very easily. Does this apply to you? Do you make 145? If you don't, don't worry about it. If you do, what does that mean? Well, that means you have to make a Roth contribution, but only in money or, you know, so all of those little things need to come from, I think two sources, right? From an employer perspective, it needs to come from the third party administrator to say generally, this is how this, this contribution provision is going to work. This is how this is going to work for you. Are you going to communicate these special employees, the high earners to us? How do we consume that and how are we going to communicate that back to you? So you're giving us the right money, you're giving us after tax money and not pre tax money. But I think on the participant level, and this is really where I'm going to defer to my is where the education comes from the investment provider community on how you're educating the participants, how you're identifying the participants that may fall into this, to this category and what is the best way to educate those employees Handle this provision, Mike, or felt?
- [39:45]
C
Yeah, you know, John, I'm going to be honest, it's not their responsibility to be very honest with you that there's no fiduciary role that they play here. That's why this plan is a non erisa plan. I think I completely agree with Sarah. There's a lot of information already in the marketplace right now. TPAs are communicating. We are. All I know, Phil, is we are. There's not a, there's not any one of our clients that haven't been aware of the fact that we've got secure 2.0 coming or has already been in place. So communication, I think, has been in a good place in my opinion. If they feel that maybe through a survey that they feel that their employees may not have the information they need, reach out to your top providers and find out again what can we do? We've gone into districts and we will go in. Phil and I will go in together, going collectively with a couple of your top 403B providers, have a couple of PD days, have us on calendar and we can talk about it and answer questions. But definitely, I think there's a lot of information already out there. As I, as we've said, we've been in, we've been doing this for the last three years. If they find there's a loophole, I think that's where I would solve it.
- [41:11]
A
Well, I have to agree with the communication because that's kind of how I reached out to the three of you to bring you back on, because my TPA sent a communication and my immediate reaction was like, oh, yeah, secure 2.0. And if that's my reaction, I'm sure others have a similar one. So I'm like, we should get the group back together and do another refresher on this. Phil, go ahead. Sorry I bumped you up there.
- [41:34]
D
No, and that's. I think it goes back to exactly what you just said. I mean, we go back to 2009 men in the 403 market that basically they're required to do a plan document, and they're required to annually notify every eligible employee that they have a plan available. And as Secure 1, now 2, and soon to be 3, these provisions are given flexibility now to the employers and the employees to manage. And more importantly, employees contribute to the plan but still have flexibility where in the past they've been. They're afraid that they couldn't get any of their money out if they needed to for certain situations. And that's important. But I think that's more of. I always go back that that's not the employer's job to get in with all of these personal times, self certification and hardships, but it allows the employee now to do that and not worry about somebody's going to know some personal stuff and get what they need to take care of their situation at that particular time.
- [42:35]
A
Right. Well, Phil, I got to thank you for a great segue. I can't let the three of you go without talking about Secure Act 3.0. So we mentioned it throughout the podcast. Can you tell me what is on the horizon for 3.0? What lessons from 2.0 will likely shape the next round of legislation? And really, what should school business officials kind of be preparing themselves for?
- [42:57]
B
Well, for me, I think my cat's already in the bag. Roth. It's going to continue to be Roth. Rothification that will continue to look at it to help them, quote, unquote, be able to purchase and buy all of their tax savings that the federal government has. And so I think as we look here is. But I also think the federal government is really of pension plans as it sits across the country. This is a complete and utter shift. We are in a. As K through 12 is a whole nation. They're in a different, unknown, uncharted, unfortunate path. You know, before, you know, your grandparents could retire on the state pension. That's no longer the case anymore. So that is, I think, one of the also main reasons why, you know, it has become such a hot topic and it has become important because the state pension plans are not going to be able to give you the 100% that you're looking for. So it really is going to be on these voluntary supplemental plans. So let's make sure they're running right. They're giving the employees the best benefits and we're providing the governmental space with the right education.
- [44:17]
A
Yeah, I think that we made this point. I think, Michael, you made this point the last time we spoke really with the state pension plans is that I use New York. I think we talked about New York specifically because that's a great example. When it was tier one, that's all you really needed. It was a huge benefit. But then as time has gone on, the state benefit has become less and less lucrative and now you're having to supplement your retirement retirement savings and income because you just, you don't have those distributions that you could have otherwise relied on. So I think you all make a great point. It says it's just becoming increasingly challenging to, to rely solely on one source for, for retirement. But. Sorry, I didn't mean to jump in there, Michael, Go ahead.
- [44:55]
C
No, I just was going to say I think what we're going to see is whether it's Secure 3 or Social Security reform desperately in need of. They poked the bear, I call it, with the 2025. Early this year they had the Social Security act, which was great. Loved it. The fact that now we don't have these pension, these Social Security offsets, which are wonderful. Problem is, and I think if you read now there's more money coming out of the Social Security system, which therefore the system's not built to. Whether or not the. We talked about it running out of money. We just took that line and we brought it closer. There definitely needs to be Social Security reform. We're going to hear a lot about it in the next year or so. What that means have no idea. But it's going to these two are going to come together. Social Security, Secure three, stay tuned to it. I'm looking forward to it to see how it's going to develop. We actually, from an equitable perspective, are certainly going to be a part of or getting more involved as much as we can legislatively. Legislatively. And I think that's for all the right reasons. What that means, who knows. But looking forward to change in my opinion. Been around a long time, have seen many changes. Changes. It's what did someone say to me? It's, it's the constant of change. Right. We have, we are seeing from year to year with the, with the enhanced ability to bring these benefits so that we recognize teachers, I'm speaking specifically for that marketplace, deserve the retirement that they, the, the quality retirement. And some of them are not getting that. And so we need to be that's the responsibility we have in terms of working in this industry. Phil.
- [46:53]
D
Yeah, I think I'll just wrap it up because those are two key points, right. That you're going to see some things. I think the other thing is one thing that they've all into a lot of people, meaning they're listening to what changes they want to see going forward and that'll be brought back into this as well as part of Secure 3.0 and beyond is constantly evolving these plans to make it better, easier to access their money when they when needed inappropriately. Right. As well as things like that of whether it's RMDs and other things that are out there and hardships. So I think those are the three keys that each one of us have laid out. That part of 3.2 or further will add to these for the future.
- [47:36]
A
Great. Well, thank you all for joining me again. I'm sure this won't be the last time we speak because at Least Secure Act 3.0 is coming out.
- [47:43]
C
Right.
- [47:44]
A
So the very minimum, you're going to have to come back on for that one more time.
- [47:48]
B
Right, Right.
- [47:49]
A
Right. But this has been incredibly informative. It's a lot for, for school districts to look out for. But to your earlier point, as long as you have a solid tpa, you should be in great shape. But at any rate, thank you all and I look forward to speaking with you again in the future.
- [48:02]
C
Thanks, John.
- [48:03]
D
Thank you. Appreciate it.
- [48:04]
B
Thank you.
- [48:07]
A
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