July 29, 2024
The SECURE Act 2.0 is transforming retirement planning by encouraging savings, enhancing retirement plan rules, and reducing employer costs.
GRF hosted the 2024 Update on Retirement Plans on May 16th, 2024, where we explored the significant changes introduced by the SECURE Act 2.0. The session provided a comprehensive overview of the new provisions aimed at enhancing retirement security.
Key Provisions of SECURE Act 2.0
Encouraging More Savings for Retirement:
One of the primary goals of the SECURE Act 2.0 is to get more people to save for retirement. The Act mandates automatic enrollment for eligible employees in new 401(k) and 403(b) plans, significantly increasing participation rates. Additionally, it allows for enhanced catch-up contributions for individuals aged 62, 63, and 64, providing an extra boost for those nearing retirement.
Improving Retirement Plan Rules:
The updated act introduces several changes designed to improve the overall effectiveness and accessibility of retirement plans. For example, part-time workers will now have better access to participate in their employer’s retirement plan, expanding coverage and retirement security for more employees. The Act also raises the required minimum distribution (RMD) age, allowing individuals to keep their savings invested for a longer period.
Lowering Employer Costs:
Recognizing the financial burden on employers, SECURE Act 2.0 includes provisions to reduce the costs associated with setting up and maintaining retirement plans. This includes providing tax credits for small businesses to offset the expenses of starting new retirement plans and implementing measures that simplify plan administration.
Additional Changes
Audit Requirement Changes:
The SECURE Act 2.0 modifies audit requirements, easing the burden on smaller plans and ensuring a more streamlined audit process. This change helps reduce administrative costs and complexities for plan sponsors.
Matching on Student Loan Payments:
A groundbreaking provision allows employers to match employee student loan repayments with contributions to their retirement accounts. This helps employees who are paying off student loans to still benefit from employer contributions to their retirement savings.
New Distribution Types Allowed:
The Act introduces new distribution options, providing more flexibility for plan participants. This includes penalty-free withdrawals for certain emergency expenses and modifications to the rules governing Qualified Charitable Distributions (QCDs).
Auto-Portability Proposed Regulation:
The Act proposes regulations for auto-portability, aiming to reduce retirement savings leakage when employees change jobs. This ensures that retirement accounts are automatically transferred to new employers’ plans, maintaining the continuity of savings.
Implementation Considerations
For plan administrators and sponsors, integrating the changes brought by SECURE Act 2.0 into your retirement plan offerings is essential. It’s important to update your plan documents to reflect the new provisions and communicate these changes clearly to plan participants.
We recommend consulting with your Third-Party Administrator (Custodian or Trustee) if you are interested in updating or amending your plan to include the provisions from Secure Act 2.0. They can provide valuable insights and guidance to ensure that your plan is compliant and takes full advantage of the new regulations.
GRF Can Help
Our team can help you stay informed and up to date with key services for reviewing employee benefit plans, including the latest requirements under SECURE Act 2.0. Contact us to find the right solutions for you and ensure your organization is prepared for these changes.
