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How Secure 2.0 Will Change Qualified Retirement Plans

Aug 4, 2023

In this video, EisnerAmper Partner Wendy Frame shines a spotlight on the Secure 2.0 Act, which was signed into law by President Biden on December 29, 2022 and aims to encourage small businesses to create retirement plans. Watch and learn more about some of the key provisions in the Act that business owners and retirement plan sponsors need to be aware of. 


Wendy Frame:

Hello, I'm Wendy Frame partner at EisnerAmper. Today I'm going to talk about the SECURE 2.0 Act and some of the provisions in the act that business owners and retirement plan sponsors need to be aware of.

First, some background. The SECURE and SECURE Act stands for Setting Every Community Up for Retirement Enhancement. The SECURE 2.0 Act was signed into law by President Biden on December 29th, 2022, and is an effort to encourage small businesses to create retirement plans. It is a follow-up to the SECURE Act of 2019. The 2.0 Act is creating a lot of buzz in the retirement plan community because it makes substantial changes to both qualified plans and IRAs.

There are several provisions within the ACT that are important to understand. They include, number one, auto-enrollment. Beginning in 2025, all new 403B and 401K plans will be required to include an auto-enrollment as a feature. This means employees who become eligible for the plan and do not make an affirmative election will be auto-enrolled at a contribution rate between three and 10% of their compensation. There are also certain exceptions for small businesses and new businesses.

Number two, tax credit for new plans. SECURE 2.0 increases the available tax credits for small employer plans. Certain small employers who establish a new plan are eligible for a tax credit for the first three years of the plan. There's a startup credit of up to $5,000, and also a credit for small employers that provide employer contributions to a new plan. Small employers can take advantage of these new higher tax credits starting with the 2023 tax year.

Number three, changes to catch up contributions. Employees who have reached age 50 can make catch up contributions to a 401K or 403B plan in excess of the deferral limit. Beginning in 2024, all catsup contributions must be made as Roth contributions for any plan participant whose compensation exceeded $145,000 in the prior plan year. This will require all plans to implement a Roth provision.

Number four, long-term part-time employees. Under current law, 401K plans can require employees to complete up to one year of service with a thousand hours during that year to be eligible for the plan. Beginning in 2025, retirement plans must allow employees with more than 500 hours of service in the past two years to make deferrals in the plan.

And number five, expansion of distributions. Secure 2.0 also expanded in-service withdrawal availability to participants who need to access their plan balances in the case of emergencies and natural disasters.

There are many more provisions that I did not cover here, so please reach out to our employee benefits team with any questions you might have about the act. Or to learn more about how we can support you and your business, please visit Thank you.

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Wendy Frame

Wendy Frame is a Partner with decades of experience in retirement plan consulting.

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