Approximately only half of employers are aware of the deadlines and provisions of SECURE 2.0 that are going into effect. Collaborating with an advisor who is well-versed in these provisions can be highly beneficial for your business. The original SECURE Act and SECURE Act 2.0 introduced numerous significant changes. Many employers find these changes daunting, making it crucial to seek the assistance of an advisor who can offer guidance and ensure compliance. While around 90 provisions have been enacted, the ones listed below will take effect between plan years 2023 and 2025.

Automatic Enrollment (SEC. 101)

Employers with more than 10 employees or that have been in business over 3 years must have an Auto-Enrollment provision in their 401(k) or 403(b) plan. The initial enrollment amount must be at least 3% but no more than 10% with an annual Auto-Escalation of 1% – 10%.

Required for plan years beginning after December 31, 2024, but also applying to any new plans starting on or after January 1, 2023. Therefore, any employer starting a plan in 2023 or 2024 with over or expecting to have over 10 employees in the future should include an Auto-Enrollment provision to avoid having to amend the plan prior to the start of the 2025 plan year.


Higher Catch-Up Limit for Ages 60-63 (SEC. 109)

Plan participants that reach or are age 60-63 (as of the effective date) can do higher catch-up contributions. The new limit for these participants is the greater of $10,000 or 50% more than the regular catch-up amount effective for the taxable year after December 31, 2024.


Student Loan Payments as Elective Deferrals for Purpose of Matching (SEC. 110)

An employer may elect to allow for matching contributions for a participant that is making qualified student loan payments for higher education expenses. The student loan matching contributions must be available to all participants eligible to receive the matching contributions and are matched and vested at the same rate as other matching contributions.  Effective for plan years beginning after December 31, 2023.


Long-Term Part-Time Worker Coverage (SEC. 125)

Building upon SECURE Act of 2019, extending eligibility to an employee that works at least 500 hours for 3 consecutive years is reduced to 2 years and is also applicable to ERISA covered 403(b) plans. This provision is effective for plan years beginning after December 31, 2024.


Emergency Savings Accounts Linked Individual Accounts (SEC. 127)

Plan Sponsors have the option to offer emergency savings accounts to their non-highly compensated employees. Participant contributions to these accounts are on a Roth basis and are capped at $2,500 (or lower if set by the employer). Employers may automatically opt in employees at no more than 3% of their pay.  Effective for plan years beginning after December 31, 2023


Updating Dollar Limit for Involuntary Cash-Outs (SEC. 304)

Increases the involuntary cash-out dollar limit to $7,000 from $5,000.  Thus, allowing the possibility of more terminated participants to be forced out. Effective for plan years beginning after December 31, 2023.


Reform of Family Attribution Rule (SEC. 315)

Adds special rules to address family attribution rules and to disregard community property laws for purposes of determining ownership of a business.  Effective for plan years beginning after December 31, 2023.


Optional Treatment of Employer Matching or Non-Elective Contributions as Roth (SEC. 604)

Plan sponsors may elect to allow participants to have some, or all of their matching or non-elective contributions treated as Roth contributions effective January 1, 2023. Roth contributions must be allowed in the plan document and the taxes must be paid outside the plan.

If you need help navigating through these upcoming changes, contact us for guidance.