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.
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.
Some of the most meaningful provisions within SECURE 2.0 are designed to promote retirement savings.
While there are some “revenue boosters” included within SECURE 2.0, there are also many provisions geared toward helping participants keep retirement money invested longer.
One of the great disparities among retirement plans today is the availability of certain institutionally priced investment vehicles, like Collective Investment Trusts or “CITs”. For years, 401(k) and other plan types have been eligible to invest in CITs that can offer access to investments at a lower price point when compared to mutual funds. 403(b) plans, for example, have been limited to only mutual funds and/or annuity contracts. SECURE 2.0 has eliminated that barrier going forward by allowing 403(b) plans to invest in CITs, when deemed appropriate. While this change is effective as the date of SECURE 2.0’s enactment, there will be a delay before we see CITs in 403(b) plans given the need to modify applicable securities laws.
While this article touches on key themes of SECURE 2.0, there are many more provisions which will help redesign the retirement plan landscape to build a more sustainable and effective framework for employees to save and spend in retirement.
In the coming weeks, Fiducient Advisors will publish additional resources for a more comprehensive review of the provisions covered above, as well as the administrative provisions included in SECURE 2.0. For any questions in the meantime, please reach out to a member of your service team.
SECURE 2.0 – What you and your clients need to know
SECURE Act 2.0: Congress Delivers Retirement Plan Legislation and Holiday Cheer as Part of Year-End Spending Bill
December 27, 2022
SECURE Act 2.0: Later RMDs, 529-to-Roth Rollovers, And Other Tax Planning Opportunities
December 28, 2022
Ed Slott: Pay Attention! Secure 2.0 Dates Are ‘All Over the Place’
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January 4, 2023
SECURE 2.0: Rethinking retirement savings
January 3, 2023
SECURE 2.0 Act of 2022—Congress' Final Gift of 2022 to Retirement Plan Sponsors
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