The SECURE 2.0 Act of 2022 (“SECURE 2.0”) is chock-full of provisions – 92, in fact – aimed at improving Americans’ preparedness for retirement. Like SECURE Act 1.0 (passed December 2019), this latest round of legislation provides workers with greater access to retirement plans and further encourages retirement savings. This article highlights key provisions of SECURE 2.0 which are likely to have the greatest impact for savers (plan participants) and retirement plans going forward.
Access
For some Americans, not having access to a workplace retirement plan has perpetuated the challenges of planning and saving for retirement. Within SECURE 2.0, a provision will now provide multi-year tax incentives for smaller employers (generally with 50 or fewer employees) to adopt a new retirement plan. SECURE 2.0 has also introduced a provision which will require Automatic Enrollment and Automatic Escalation for new 401(k) and 403(b) plans beginning after December 31, 2024. While there are exceptions for certain types of plans (generally non-ERISA plans) and for smaller employers, mandating automatic features will help ensure more Americans are enrolled and actively saving in workplace retirement plans.
