Q: Is SECURE 2.0 beginning to close the retirement savings gap?

A: It's tough to say right now if SECURE 2.0 is directly responsible for closing the retirement savings gap. Some aspects of the legislations that we believe will help more Americans pave a path toward retirement readiness:

Automatic enrollment— 401(k) or 403(b) plans established on or after Dec. 29, 2022, are required to include an automatic enrollment feature beginning in 2025.
Expanded catch-up contributions— The annual catch-up contribution amount for participants ages 60–63 is increased to 150% of the regular limit on catch-up contributions, if higher, beginning in 2025.
Required minimum distributions (RMDs)— The age for required minimum distributions increased from 72 to 73 in 2023 and goes up to 75 in 2033. In addition, the penalty for not taking an RMD is reduced to 25% (in some cases 10%).

Q: What are the key 2024 optional provisions that employers need to take advantage of?

A: SECURE 2.0 legislation introduced over 90 provisions designed to help improve retirement readiness, including:

Employer matching for employees' student loan payments within their retirement plans
Expedited eligibility for long-term, part-time workers to participate in a plan
Emergency withdrawal provision

Q: What key SECURE 2.0 provisions go into effect in 2025 that employers need to be compliant with?

A: A few 2025-specific provisions include:

Expanding automatic enrollment in retirement plans, which requires (less subject to an exception) auto-enrollment and auto-escalation for all 401(k) and 403(b) plans
Improving coverage for part-time workers, which reduces to two years (from three years) the requirement to allow long-term part-time workers to participate in a company's 401(k) plans
Retirement savings "lost & found," which requires the Department of Labor to create a national online "lost & found" database for Americans' retirement plans

Related: Navigating SECURE 2.0 confusion: collaboration between SMBs and third-party administrators

Q: How does SECURE 2.0 empower small businesses to launch a retirement program for employees?

A: One of the ways SECURE 2.0 makes it easier for small businesses to offer retirement plans is by creating starter 401(k) plans. Another way is the "contribution credit" that came along with SECURE 2.0, which allows small employers to make a contribution to their employees and get a tax credit up to $1,000 per employee. We believe this will further incentivize small businesses to implement a retirement plan.

Instant Insights /

Is SECURE 2.0 closing the retirement gap for Americans?

More From HR Executive

Related Stories

Recommended For You