The Securing a Strong Retirement Act of 2022 makes its way toward becoming law
The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into federal law in 2019. On March 29, 2022, the U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 (“SECURE 2.0”) by a vote of 414 to 5.
SECURE 2.0 updates and expands the Secure Act, by including in the following ways:
Student Loan Matching: SECURE 2.0 allows for employer matching of contributions to a 401(k) plan based on an employee’s monthly student loan payments. This provision is projected to help 3.4 million employees who cannot presently afford to make elective deferrals to their 401(k) accounts due to their student loan repayment obligations.
Extend Participation Options for Part-Time Employees: the SECURE Act expanded the eligibility of part-time employees to make elective deferrals to a 401(k) plan after three years of service. SECURE 2.0 further lowers the eligibility period for part-time workers to two years of service.
Employee Auto-Enrollment: Defined contributions plans established after 2021 will be required to automatically enroll new employees, when eligible, at a pretax contribution level of between 3% and 10% of the employee’s compensation, unless the employee opts out or elects a different percentage.
Retirement Savings Lost and Found: SECURE 2.0 requires the Department of Labor to establish an online searchable database to allow participants to locate the administrator of a retirement plan and allow plan sponsors and administrators to locate missing participants.
Further Required Minimum Distribution Delays: The SECURE Act extended the date by which participants are required to receive a Required Minimum Distribution (RMD) from age 70½ to age 72. SECURE 2.0 extends the RMD date further to age 73 (effective January 1, 2023); age 74 (effective January 1, 2030); and age 75 (effective January 1, 2033).
The Senate is expected to take up SECURE 2.0 later this year. If the bill passes the Senate, any difference between the Senate version and the version based by the House will need to be reconciled before SECURE 2.0 is signed into law.
If you have any questions about SECURE 2.0, please contact your usual employee benefits attorney.
Author: Craig Schechter