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A Business Owner's Guide To The SECURE Act 2.0

by Kevin Schuler on Jan 3, 2023 1:32:22 PM

The Setting Every Community Up for Retirement (SECURE) Act, passed in 2019, was intended to help Americans increase their retirement nest eggs by changing some of the rules around saving and withdrawing money. Now, the recently passed SECURE Act 2.0 builds upon these retirement system improvements to further aid employees. What does your business need to know about SECURE Act 2.0 details? Let’s find out.

In this article, we’ll discuss what SECURE Act 2.0 includes and the impacts to you and your business now that it’s passed. After reading this, you’ll understand the key provisions of the legislation so you can be prepared to adapt your retirement plan policies to ensure compliance.

What is SECURE Act 2.0?

SECURE Act 2.0 refers to multiple pieces of follow-up legislation – Enhancing American Retirement Now (EARN) Act, Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (Rise and Shine) Act, and Securing a Strong Retirement Act –  that build upon improvements to the retirement system implemented under the 2019 SECURE Act.

The legislation includes a collection of provisions. Here are some of the most important SECURE Act 2.0 details you need to know for your business.  

When will SECURE Act 2.0 be implemented?

As you can see from the list of changes, the various provisions in SECURE Act 2.0 will be implemented at different times in the coming years. Some will take effect as early as 2023, such as the ability to provide small incentives for participation, while others, like the increase to age 75 for RMDs won’t happen until 2033.

The way the implementation dates are structured, you’ll have plenty of time to work with your third-party administrator and/or payroll company to institute any required changes to your plan and communicate with participants about new policies.

How will this impact my business?

SECURE Act 2.0 is designed to help kickstart savings for many employees to lead to greater retirement readiness. And this can be a critical factor in reducing employee financial stress – and improving productivity, engagement, and retention in the process. Yet, there may be some short-term costs to this longer-term upside.

For example, since features like auto enrollment and annual savings rate increases will be mandated, you’ll need to step up in other ways to differentiate your retirement benefits such as a more competitive matching formula. In addition, since you may need to expand plan access to previously non-covered employees, that may drive up costs as well. It’s important to keep in mind, however, that prioritizing the retirement savings needs of your employees can go a long way to positively impacting your workforce, and that can far outweigh these costs.

How to Best Design Your 401k Going Forward

With a number of changes contained in SECURE Act 2.0, it’s important to make sure your 401k reflects any required plan design features. Be sure to talk to your third-party administrator, who can help you avoid compliance missteps.


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