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SECURE Act 2.0

SECURE Act 2.0: Key Elements and Effective Dates

WHAT IS THE SECURE Act 2.0? 
On December 29, 2022, President Biden signed into law the “Consolidated Appropriations Act, 2023,” which included a major
package of retirement savings provisions known as “SECURE 2.0 Act”.  The SECURE 2.0 Act is intended to aid in the retirement security of all Americans, by helping improve an individuals’ ability to save
for retirement, expand access to retirement plans, and ease plan administration for employers. The act has some features are that effective immediately, and some that become effective in the years to come.

Understanding when and how these effect your company's 401(k) plan is crucial. We've provided a timeline below that highlights some of the key changes: 

 

2023

Mandated

  • New Beginning Dates for Required Minimum Distributions (Pushed to Age 73,75)
  • New Distribution Statuses that are Exempt from the 10% Penalty

Optional

  • Employer Matching contributions may be made as Roth
  • Encouraging 401(K) Participation with Small Financial Incentives
  • Employee Self-Certification of Hardship Distribution Conditions

2024

Mandated

  • No RMDs for Roth 401(k) Accounts
  • Elective Catch-Up Contributions Becoming Roth (Income $145,000+)

Optional

  • Student Loan Matching Program
  • Higher Cash-Out Distribution Limits
  • New Emergency Savings Accounts for Employees

2025

Mandated

  • Participants Aged 60-63 have increased Catch-Up Contribution Limit on 401(k)
  • Required Automatic Enrollment for New Plans
  • Part-Time Worker Definition Modification for Eligibility

2027

Mandated

  • Saver’s Match converted to Government Match for 401(k) Participants

That’s just a snippet of the Act. It’s worth noting some of these provisions are still awaiting further clarification from regulators. Overall, this act introduces more administrative complexity for 401K plans and it is critical you stay abreast with the latest changes. We will produce an individual report for your plan when we convene for your annual investment committee meeting. If you have any questions in the meantime, please reach out to us so we can answer your questions immediately.