The American Institute of CPAs is asking the Treasury Department and the Internal Revenue Service for greater clarity on their proposed regulations for the SECURE 2.0 Act of 2022.

SECURE 2.0, like the original SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019 includes a wide range of provisions related to retirement planning and tax-favored 401(k) and 403(b) plans. SECURE 2.0 generally requires newly created 401(k) and 403(b) plans to automatically enroll eligible employees starting with the 2025 plan year. 

The Treasury and the IRS issued the proposed regulations on auto enrollment and Roth IRA catchup contributions in January during the waning days of the Biden administration. Unless an employee opts out, a plan is required to automatically enroll the employee at an initial contribution rate of at least 3% of their pay and automatically increase that contribution rate by 1% each year until it reaches at least 10% of an employee’s pay. 

The requirement generally applies to 401(k) and 403(b) plans established after Dec. 29, 2022, which is the date when the SECURE 2.0 Act became law, but there are some exceptions for new and small businesses, church plans, and governmental plans.

Based on the recent proposed regulations, the AICPA made several recommendations in its comment letter, including that the Treasury and the IRS issue final regulations clarifying that the investment requirements for trustee-directed plans in Section 1.414A-1(c)(4) of the proposed regs would not apply to plans that don’t adopt participant direction of investment. 

In determining the employee count for small businesses, the AICPA recommended that the Treasury and the IRS issue final regulations stating that only employees of the plan sponsor are included in the count for purposes of determining status as a small business under Section 414A.

The AICPA also had a comment on the definition of “predecessor employer,” suggesting that the Treasury and the IRS issue final regulations that define the term by reference to Treas. Reg. Section 1.415(f)-1(c)(2) for purposes of Section 414A(c)(4)(A). 

“The purpose for our letter is to provide input to Treasury and the IRS in order to further clarify the rules and provide recommendations to help with the implementation of the auto-enrollment provision of the law,” said Kristin Esposito, AICPA director of tax policy and advocacy, in a statement Tuesday. 

The Public Company Accounting Oversight Board sanctioned James PAI CPA and its sole owner and partner Yu-Ching James Pai for audit failures.

The PCAOB found that Pai and his firm violated multiple PCAOB rules and standards in connection with two audits of one issuer client, that the firm violated quality control standards, and that Pai directly and substantially contributed to those violations. In the audits, the firm and Pai failed to perform risk assessments and obtain sufficient audit evidence in multiple areas, including revenue and related party transactions.

“Performing appropriate risk assessments and obtaining sufficient evidence are fundamental to an audit, and failure to meet these most basic requirements puts investors at risk,” PCAOB chair Erica Williams said in a statement.

The PCAOB also found that, in the audits, the firm failed to perform engagement quality reviews, obtain written representations from management, comply with requirements concerning critical audit matters and audit committee communications and documentation, and establish a system of quality control.

“Issuing an audit report stating that the audit was performed in accordance with PCAOB standards is a solemn commitment to the investing public, and serious consequences can follow when an auditor fails to meet that commitment,” Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations said in a statement.

Without admitting or denying the findings, Pai and the firm consented to the PCAOB’s order, which:

• Censures Pai and the firm and imposes a $40,000 civil money penalty, jointly and severally, against them;
• Revokes the firm’s PCAOB registration with a right to reapply after three years;
• Bars Pai from being an associated person of a PCAOB-registered firm, with a right to petition the Board to terminate his bar after three years;
• Requires the firm to undertake remedial actions to improve its system of quality control and procedures before reapplying for registration; and,
• Requires Pai to complete 40 CPE hours before seeking to terminate his bar.

Bridgewater Associates founder Ray Dalio warned House Republicans of the dangers of rising U.S. deficits and urged them to cut the budget deficit to just 3% of gross domestic product or risk debt service costs squeezing government spending.  

Dalio’s message of austerity comes as House and Senate Republicans battle over the size of spending cuts to be paired with a giant tax cut coming later this year. The U.S. budget deficit was 6.6% of GDP in 2024, according to the Congressional Budget Office. 

“There was a good understanding of the choices and the possibilities to manage this dire situation over time,” Dalio said in a statement after the meeting. “I look forward to staying in touch about these issues and having similar discussions with others so that there are realistic assessments of the issues and what might be done to deal with them.”

The House has drafted a $4.5 trillion tax cut blueprint paired with $2 trillion in spending cuts over ten years, which would add about $3 trillion to deficits over the decade. Senate Republicans want to deploy a budget gimmick to allow them to add trillions more in tax cuts without more spending cuts. House and Senate GOP leaders will work to resolve their differences in a meeting with Treasury Secretary Scott Bessent later Tuesday. 

After the Dalio meeting, House Budget Chairman Jodey Arrington said he’s resolved to block any Senate tax plan that lacks sufficient spending cuts, saying it would be dead on arrival in the House. But Arrington also acknowledged that the House’s own budget blueprint fails to meet Dalio’s 3% GDP target.  

“This is not something you accomplish in one bill,” he said. “We need to begin exercising the spending cut muscles.”not supported.

Representative David Schweikert, an Arizona Republican, said Dalio’s message means Congress must pass spending cuts to pay for their plans to make President Donald Trump’s expiring 2017 tax cuts permanent as well as any new tax cuts.

Dalio has been warning for some time that the U.S.’s growing debt burden threatens the country’s financial stability, an argument he advances in a forthcoming book: How Countries Go Broke: The Big Cycle.

“We are at a precarious time in what I call the Big Cycle, where there is a confluence of major forces playing out in a way that is similar to many times in history,” Dalio said in a statement released in advance of the meeting. 

Dalio, 75, stepped down as co-CEO of Bridgewater in 2017 and retired from the hedge fund in 2022. He has a net worth of more than $16 billion, ranking 132nd in the Bloomberg Billionaires Index.