On December 29, 2022, President Joe Biden signed into law a landmark retirement package. The SECURE 2.0 Act includes many new provisions that become effective over various dates through 2026. Some of the most notable provisions include:

  • Required Minimum Distributions (RMDs): Under current law, RMDs must begin at age 72. Under SECURE 2.0, this is increased to 73 beginning in 2023.
  • 401(k) Financial Incentives: SECURE 2.0 allows employers to offer small financial incentives, such as low-value gift cards, to boost participation rates effective for plan years after December 2022.
  • Emergency Distributions: Starting in 2024, SECURE 2.0 allows participants to take early emergency distribution from their retirement plan to cover immediate and unforeseen financial needs. These distributions may be up to $1,000, can be taken once per year and will not be subject to the usual 10-percent tax penalty for early distributions. If such distributions are not repaid within a certain window, another may not be taken for three years.
  • Automatic Enrollment: Starting in 2025, SECURE 2.0 expands automatic enrollment. 401(k) and 403(b) plans will be required to automatically enroll eligible participants unless they opt out of participation.
  • Catch-Up Contributions: SECURE 2.0 increases allowable catch-up contributions beginning in 2025. Participants that are 60-63 years old can contribute $10,000 or 50 percent more (whichever is greater) than the regular catch-up amount. After 2025, such amounts will be indexed for inflation.
  • Coverage for Part-Time Workers: SECURE 2.0 reduces the three-year service requirement for long-term, part-time employees to two years and expands this requirement to ERISA 403(b) plans.

SECURE 2.0 promises to have a significant impact on retirement planning and retirement plan administration.

For further questions, please contact a member of GHJ’s Employee Benefit Plan team.

Holoubek Andrew Halfbody

Andrew Holoubek

Andrew Holoubek, CPA, has more than 10 years of public accounting experience and provides auditing services for clients in a variety of industries, including manufacturing/distribution, food and beverage, health and wellness, technology, consumer products, financial services and nonprofits and…Learn More