The SECURE 2.0 Act of 2022 was enacted as part of the 2023 Consolidated Appropriations Act, which was signed into law on December 29, 2022. It was the culmination of a multi-year, bicameral, bipartisan effort to follow up on the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). This is a summary of the changes most relevant to employers and their retirement plans. Where changes will be mandatory for retirement plans or the employer, we have so indicated. We expect significant administrative guidance on these changes to be forthcoming from the IRS and U.S. Department of Labor.

Changes to employer-sponsored retirement plans

Expanding automatic enrollment in retirement plans. Required Change. The Act requires newly adopted 401(k) and 403(b) plans to automatically enroll participants in the respective plans upon becoming eligible (and employees may opt out of coverage). The initial automatic enrollment amount is at least 3% but not more than 10% of compensation. Each year thereafter, that amount is increased by 1% until it reaches at least 10%, but not more than 15%. All current 401(k) and 403(b) plans are grandfathered in. There is an exception for small businesses with 10 or fewer employees, new businesses (i.e., those that have been in business for less than 3 years), church plans, and governmental plans. This change is effective for plan years beginning after December 31, 2024.