Password handling and storage in managed packages must follow these security requirements: 1. **Encryption**: Passwords should never be stored in plain text. Use Salesforce's Apex Crypto calls for encryption, and store encryption keys securely in protected custom settings or hidden custom metadata API fields. 2. **Access Control**: If passwords are stored in custom objects, ensure the fields are encrypted and permissions are configured to restrict access. 3. **Authentication Data**: Avoid using encrypted fields for authentication data. Instead, store such data in named credentials or protected custom settings. 4. **Transient Keywords**: Use transient keywords in code to prevent storage in viewstate when updating settings. 5. **Avoid Hardcoded Secrets**: Don't hardcode passwords or secrets in field declarations, variable assignments, HTTP headers, or property files. Instead, use secure storage mechanisms like named credentials. 6. **Client Applications**: Store secrets in OS vendor-supplied keystores, such as the keychain for Mac, DP-API for Windows, or gnome-keyring for Linux. 7. **Server Applications**: Use vendor-supplied encryption functionality or recognized third-party cryptographic toolkits to protect credentials against vulnerabilities like SQL injection.