Secure Act 2.0: What You Need to Know

Posted on Mar 2, 2023

As part of TPS Group's commitment to promoting a secure financial future for all, we're excited to share with you the key provisions of the SECURE Act 2.0. This legislation, which was introduced in Congress last year, aims to expand access to retirement savings and make it easier for workers to save for their future.

Here are some of the key provisions of the SECURE Act 2.0:

1. Automatic enrollment and escalation: The new legislation encourages employers to automatically enroll employees in their retirement plans and to automatically increase their contributions over time. This can help increase participation in retirement plans and boost savings.

2. Higher catch-up contributions: The SECURE Act 2.0 increases the catch-up contribution limits for workers aged 62 to 64. This will allow older workers to save more for retirement and catch up on any missed contributions.

3. Expanded access to multiple employer plans (MEPs): The new legislation allows small employers to join together to form MEPs, which can provide economies of scale and lower costs for plan administration. This can make it easier and more affordable for small businesses to offer retirement plans to their employees.

4. Simplified plan rules: The SECURE Act 2.0 simplifies some of the rules for retirement plans, such as the nondiscrimination testing rules and the required minimum distribution (RMD) rules. This can reduce administrative burdens and costs for plan sponsors.

5. Lifetime income options: The new legislation requires retirement plans to provide participants with information about lifetime income options, such as annuities, which can help participants plan for retirement income that lasts for their lifetime.

6. IRA contribution age limit removed: The SECURE Act 2.0 removes the age limit for making contributions to traditional IRAs, which was previously set at 70 and a half. This allows older workers to continue saving for retirement even after they've reached retirement age.

7. Student loan payments and retirement savings: The new legislation allows employers to make matching contributions to retirement plans based on employees' student loan payments. This can help younger workers who are burdened by student loan debt to save for retirement while paying off their loans.

Overall, the SECURE Act 2.0 includes many provisions that can help workers save for retirement and simplify plan administration for employers. At TPS Group, we're committed to helping our clients take advantage of these new opportunities and make the most of their retirement savings. If you have any questions about how the SECURE Act 2.0 may affect your retirement plan, please review this document about the Key Provisions of the Secure Act 2.0, and don't hesitate to contact us.