![]()
Retirement Security Just Got a Little More SECURE
In the final days of 2022, Congress passed a comprehensive government funding bill (Omnibus) that in addition to funding the federal government through the remaining 2023 fiscal year, also included the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The SECURE 2.0 Act expands on previously passed legislation, Setting Every Community Up for Retirement Enhancement Act (SECURE Act) which revised rules around retirement saving, including raising the age of required minimum distributions (RMDs) and allowed workplace savings plans to offer annuities.
SECURE 2.0 contains several provisions that will help workers boost savings, support small employers who want to support their employees retirement goals, and increase tax incentives for those who are already working to secure their retirement future.
Establishment of Starter 401k Plans: Beginning in 2024, Starter 401k plans will serve employers who do not already offer 401k plans to employees. The starter plan requires automatic enrollment, eliminates year end testing requirements and establishes the same contribution limits as the current IRA contribution limit of $6,000. The starter plan provides a great entry point for small businesses, especially given that they do not allow employer contributions meaning that even the smallest of small businesses can offer something to their employees.
Part-Time Eligibility: Starting in 2025, employers will be required to allow part time employees (workers with over 500 hours per year) to participate in their retirement plan after two years of service. Employees with over 1000 hours of service must be included after 1 year of service. Since the workforce includes more part time workers now than in the past, it means more workers will be eligible to contribute employer sponsored retirement plans.
Increased Catch Up Limits: SECURE 2.0 increases for employers with 26-100 employees if they make employer nonelective contributions of 3% or a 4% matching contribution.
With the majority of American workers employed by small businesses, it’s important that small employers are empowered with the tools needed to give workers options for their retirement. With the new provisions offered through the SECURE 2.0 Act, we believe small employers are better positioned to save for a secure retirement.
Meet The Author:
As Vice President for Government Relations and Public Affairs, I work to explain how actions on Capitol Hill can impact the self-employed. I love D.C. and have made my home in Capitol Hill, where I live with my husband and black Labrador, Coltrane. We love playing volleyball and softball on the National Mall.
More...