SECURE 2.0, which builds off the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, enacted to improve retirement readiness

Author: Steven Grieb


On December 23, 2022, Congress formally passed SECURE 2.0. President Biden is expected to sign the legislation before December 30. The statute is the final compilation of several bills: (1) the Securing a Strong Retirement Act, which passed the House of Representatives in March of 2022; (2) the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE & SHINE), which passed unanimously through the Senate's Health, Education, Labor & Pensions (HELP) Committee; and (3) the Enhancing American Retirement Now Act (EARN), which passed unanimously through the Senate Finance Committee.

SECURE 2.0 contains a wide array of mandatory and optional changes for retirement plans. While more detailed descriptions of SECURE 2.0's most significant provisions will be forthcoming, highlights of the provisions impacting qualified retirement plans include:

  • Automatic enrollment for new plans: Requiring newly established 401(k) and 403(b) plans to automatically enroll participants;
  • Expansion of self-correction: Expanding self-correction opportunities, including expanded abilities to self-correct operation errors;
  • Student loans and employer match: Permitting plan sponsors to contribute an employer match for participants who are repaying student debt;
  • Increased catch-up: Adding a higher catch-up limit for participants for four years at ages 60 through 63 to the greater of $10,000 or 150 percent of the regular catch-up amount;
  • Increased required minimum distributions (RMDs) age: Delaying the required distribution beginning date age to age 73 in 2023 and 75 in 2033;
  • Long-term, part-time employees: Allowing long-term, part-time employees to defer after two (rather than three) consecutive years with at least 500 hours;
  • Financial incentives for participation: Enabling employers to offer small financial incentives, such as low-dollar gift cards, to boost employee participation in workplace retirement plans;
  • Emergency savings accounts: Authorizing defined contribution plans to create emergency savings accounts for non-highly compensated employees;
  • Emergency expenses: Permitting distributions for emergency expenses, up to $1,000 each calendar year;
  • Increased tax credits for new plans: Increasing tax credits for small employers that adopt new plans;
  • Multiple employer plans for 403(b) plans: Expanding retirement savings options for not-for-profit employers by permitting 403(b) plans to be established as multiple employer plans;
  • Hardship distributions for 403(b) plans: Revising the 403(b) hardship distribution rules to be more consistent with the 401(k) hardship distribution rules;
  • RMD excise tax reduction: Reducing the excise tax on missed required minimum distributions from 50 to 25 percent;
  • Roth RMDs: Eliminating required minimum distributions from Roth accounts in employer plans;
  • Lost participants: Creating a national database to assist taxpayers to locate lost retirement savings;
  • Saver's tax credit: Modifying the "Saver's Tax Credit" from a credit paid in cash as part of a tax refund to a government matching contribution that must be deposited into a taxpayer's IRA or retirement plan;
  • Early withdrawal penalty exemptions: Adding an exception to the 10% early withdrawal penalty for victims of domestic abuse and terminally ill individuals;
  • Automatic force-outs: Increasing the limit for forcing distributions without participant consent from $5,000 to $7,000; and
  • Paper statements: Requiring that defined benefit plans give a paper benefit statement at least once every 3 years, and defined contribution plans give paper benefit statements at least once every year.

SECURE 2.0 includes both required provisions and optional provisions that plan sponsors can choose to implement. While the provisions of SECURE 2.0 would become effective operationally at different points, plan sponsors would not have to amend their plan documents to comply with the new SECURE 2.0 rules until the close of the 2025 plan year (2027 in the case of governmental plans).

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