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Pennsylvania Compliance Connection - March 2023

March 1, 2023

Federal Compliance Update

Federal: FCRA Summary Updated

On March 20, 2023, the Consumer Financial Protection Bureau (CFPB) issued a final rule which, among other things, updates their Summary of Your Rights Under the Fair Credit Reporting Act (FCRA) and replaces the 2018 version. The summary details the major rights guaranteed under the act. For instance, employers that use a credit report to deny employment must provide the applicant with the name, address, and phone number of the agency that provided the credit report information. The final rule also makes non-substantive changes to the act to include removing outdated business references. The final rule is effective April 19, 2023, but the mandatory compliance date is March 20, 2024.

Secure Act 2.0 – What Should Employers Know?

Question: What should we know about the new “Secure Act 2.0” and how will it impact our retirement plan?

Answer: On Dec. 29, 2022, President Biden signed the Consolidated Appropriations Act of 2023, an omnibus bill that includes the “SECURE Act 2.0.” The SECURE Act 2.0 is intended to increase employees’ retirement savings. It makes numerous important changes that employers should be aware of. Some key provisions for 401(k) and403(b) plans include the following:

  • Expanding Automatic Enrollment – To boost participation in retirement plans, employers with new 401(k)and 403(b) plans will be required to automatically enroll employees in their plans (unless employees opt out) at a rate of at least 3% but not more than 10% of eligible wages. This change is effective for plan years beginning after Dec. 31, 2024. Retirement plans that existed on Dec. 29, 2022, are not subject to this requirement.
  • Increasing Catch-up Contributions – Employees age 50 and older can contribute an extra

$7,500 (for 2023) to their retirement accounts as a “catch-up contribution.” Beginning in 2025, this limit will increase to$10,000 (or, if greater, 150% of the regular catch-up contribution amount) for employees ages 60 to 63. The increased amount will be indexed for inflation after 2025.

  • Roth Treatment for Catch-up Contributions – Beginning in 2024, catch up contributions must be made on a Roth (after-tax) basis. However, employees whose prior year wages do not exceed $145,000 (indexed for inflation) can make these contributions on a pre-tax basis.
  • Optional Roth Treatment for Employer Contributions – Effective immediately, employers may provide employees with the option of receiving any employer matching contributions on a Roth (after-tax) basis.
  • Expanded Eligibility for Long-term, Part-time Employees – Under current law, 401(k) plans must allow part-time employees to participate after they complete three consecutive years of service (with at least 500hours of service). Effective for plan years beginning after Dec. 31, 2024, the three-year rule is reduced to two years.
  • Student Loan Payments as Matching Contributions – Effective for plan years beginning after Dec. 31,2023, the Act allows employers to make matching contributions with respect to qualified student loan payments.
  • Withdrawals for Emergency Expenses – Generally, an additional 10% tax applies to early distributions from tax-preferred retirement accounts, such as 401(k) plans, unless an exception applies. Beginning in 2024, the Act provides an exception for certain distributions for emergency expenses, which are generally unforeseen immediate financial needs relating to personal or family emergency expenses.

Employers should consult with their retirement plan service providers regarding the Act’s provisions, including how to incorporate the changes into their plans and communicate the new rules to employees.

President Biden Vetoes Challenge to DOL ESG Final Rule

Late last year, the U.S. Department of Labor (DOL) finalized a rule allowing plan fiduciaries to consider climate change and other environmental, social and governance (ESG) factors when they make investment decisions and exercise shareholder rights. Specifically, the rule clarified the application of the fiduciary duties of prudence and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA) when selecting plan investments and exercising shareholder rights, including proxy voting.

Congress subsequently issued a joint resolution (H.J. Res. 30) that would have nullified the DOL final rule. However, on March 20, 2023, President Biden vetoed the joint resolution. Accordingly, the final rule remains in effect, although additional court challenges to the rule are currently pending.

Overview of the Final Rule

The final rule provides that a fiduciary’s duty of prudence must be based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis. Under the final rule, such factors may include the economic effects of climate change and other ESG factors on the particular investment or investment course of action.

In addition, the final rule:

  • Removes the special rules for qualified default investment alternatives (QDIAs) that apply under prior rules from 2020 and would instead apply the same standards to QDIAs that apply to other investments;
  • Changes the “tie-breaker” standard, which permits fiduciaries to consider collateral benefits as tie-breakers in some circumstances, by replacing existing provisions with a new standard and removing special documentation requirements; and
  • Includes three noteworthy changes to the 2020 rules related to exercises of shareholder rights, including proxy voting.

DOL Resources

A DOL fact sheet on the final rule is available, which further details key changes and provides the procedural background for the rule.

State Compliance Update

Nothing to report this month.

Compliance Calendar


4/29 – Remove OSHA Form 300A 04/30 – Form 941 Filing Deadline (Q1)


Nothing this month


Nothing this month


Lighthouse HR Support (LHRS) provides practical human resource information and guidance based upon our knowledge and experience in the industry and with our clients. LHRS services are not intended to be a substitute for legal advice. LHRS services are designed to provide general information to human resources and/or business professionals regarding human resource concerns commonly encountered. Given the changing nature of federal, state and local legislation and the changing nature of court decisions, LHRS cannot and will not guarantee that the information is completely current or accurate. LHRS services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice. Use of our services, whether by phone, email or in person shall indicate your acceptance of this knowledge.

Written By:

Kelly Murphy

Kelly Murphy

Senior HR Business Partner

Kelly brings a wealth of knowledge with nearly 30 years of human resource experience. She provides expertise in various human resource categories, including employee relations, performance management, HR Form creation/review (employee handbooks, job descriptions, etc.), employee/management training, workplace investigations, etc. Her human resource certifications include PHR (Professional Human Resources) and SHRM-PC (Society for Human Resource Management Certified Professional). 

Kelly attended Colorado Mesa University and Waldorf University, where she earned a degree in Human Resource Management and Business Administration with Summa Cum Laude honors. She was named Western Colorado Human Resource Association Professional of the Year, 2013, and currently serves on the Board of Directors. She also is a member of the WCHRA Skills Development Committee, the WCCA Education Committee, and the Members/Events Committee. She serves as an Ambassador for both the Fruita and Palisade Chamber of Commerce.