Secure 2.0
Helping your employees save for retirement just got a lot simpler. When your people aren’t stressed about their financial future, they’re more likely to be engaged and productive at work. Everybody wins.
Understanding the
SECURE 2.0 Act
Enacted in December 2022, the SECURE 2.0 Act encourages Americans to save for retirement and incentivizes employers to offer retirement plan benefits. Learn how these new incentives may affect your business and its retirement plan processes today.
What is SECURE 2.0?
- The SECURE 2.0 Act of 2022 is a law designed to improve retirement savings in the U.S. It builds on previous legislation, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.
- The Act contains over 90 new provisions to promote retirement savings, boost incentives for businesses to offer retirement plans and offer more flexibility to those saving for retirement.
- Some provisions are already in effect, while others will go into effect in 2025 and beyond.
- Some provisions are required while others are optional for plan sponsors to provide.
Why is it important?
- SECURE 2.0 is important because it encourages and makes it easier for employees to save for retirement and incentivizes employers to offer retirement plan benefits.
- For employees, it increases catch-up contribution limits, increases the age for required minimum distributions, and expedites eligibility for long-term, part-time employees, among other enhancements.
- For small businesses, it includes tax credits for plan start-up costs and employer contributions.
Key provisions of the legislation
- Enhanced tax credit incentives for small businesses starting retirement plans.
- Automatic 401(k) plan enrollment and escalation.
- Expanded use of Roth contributions.
- Increased age for required minimum distributions (RMDs).
- Increased catch-up contribution limits.
- Expedited eligibility for part-time employees.
- Expanded access to retirement savings including emergency savings.
- Employer 401(k) match for student loan payments.
- Federal saver’s matching program for low- to middle-income employees.
2026 Updates
Required provisions going into effect Jan. 1, 2026
SECURE 2.0 continues its impact on employees saving through 401(k) plans with two key provisions going into effect on January 1, 2026: Roth catch-up contributions for high earners and the start of annual contribution escalation for automatically enrolled participants.
Roth 401(k) Catch-Up Contributions
- Employees aged 50 and over who earned more than $150,000 in the previous year must have their 401(k) catch-up contributions treated as after-tax Roth contributions.
- The dollar threshold will be adjusted annually by the IRS for inflation.
Auto Escalation for Auto-Enrolled Participants
- If SECURE 2.0 required your 401(k) to implement automatic enrollment for January 1, 2025, annual auto-escalation will start January 1, 2026.
- Impacted employees who were automatically enrolled at least 12 months prior will see their contribution rates increase by 1%, unless they opt out beforehand.
Get a summary of the key provisions to the SECURE 2.0 Act
Watch the replay
Leveraging legislation to keep
employee benefits competitive
View Insperity’s webinar on SECURE 2.0 for opportunities to gain a talent advantage by supporting your employees’ financial health beyond the basics of a 401(k) plan. From this in-depth discussion, discover how the legislation’s new provisions enhance your employee compensation strategy and learn ways to determine the features most important to your team.
Frequently asked questions
What is SECURE 2.0?
The SECURE 2.0 Act was enacted on Dec. 29, 2022, and serves as a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Both pieces of legislation are intended to address a perceived retirement readiness crisis by doing more to encourage retirement plan availability and participation. Some provisions went live the day the bill was signed, and others won’t be effective until 2024, 2025 and beyond. Some provisions are required, while others are optional.
Why is SECURE 2.0 important?
SECURE 2.0 is important because it encourages and makes it easier for employees to save for retirement and incentivizes employers to offer retirement plan benefits.
How is Insperity implementing required and optional provisions of SECURE 2.0?
Insperity has been reviewing SECURE 2.0 and evaluating next steps since the legislation was enacted. Many upcoming changes relate to payroll processes in support of retirement plan operations. As a result, much of Insperity’s efforts are focused – from a payroll perspective – on making the necessary modifications to our payroll systems to accommodate the new requirements. Additionally, Insperity Retirement Services has been making the necessary changes to its operational processes, procedures and technology. Finally, the Insperity Benefits Plan Committee continues to assess which optional SECURE 2.0 provisions to adopt in the Insperity 401(k) Plan.
How will Insperity communicate with clients about SECURE 2.0?
Insperity has been communicating with clients about relevant SECURE 2.0 provisions that are already in effect. Additional information on SECURE 2.0, who is impacted and what clients should be thinking about will be shared over the coming months. When appropriate action needs to be taken, Insperity will work with clients on implementation.
Where can I find detailed information about SECURE 2.0 provisions?
The SECURE 2.0 Key Provisions Summary reviews some of the provisions that may impact Insperity, our clients and employees. It includes a description, effective date, whether required or optional, and information specific to our client base.
Click to view Key Provisions SummaryWhat are some of the most discussed provisions of SECURE 2.0?
There are several provisions that have received a lot of attention by employers as well as legal and financial organizations. Below is an overview of some of the most talked-about provisions.
Enhanced plan startup tax credit for small businesses
In 2023, the startup plan tax credit increased to 100% of startup costs for small businesses with 1-50 employees (still 50% for employers with 51- 100 employees), and small businesses with 1-100 employees may also claim a tax credit for employer contributions for five years after startup.
Automatic enrollment requirement
Any 401(k) or 403(b) plan established after Dec. 29, 2022, is now required to automatically enroll eligible employees and implement automatic annual deferral increases.
Expanded catch-up contributions
Beginning in 2025, the annual catch-up contribution amount increases for participants ages 60-63.
Roth catch-up
Beginning in 2026, all catch-up contributions for participants earning more than $145,000 in the prior year must be made as Roth contributions.
Changes to required minimum distributions
The age requirement for participants to start taking required minimum distributions (RMDs) increased from 72 to 73 in 2023 and will increase to age 75 in 2033. Additionally, penalties for not taking an RMD were reduced in 2023. Another change, which went into effect in 2024, is that Roth contributions are no longer subject to RMD requirements during the participant’s lifetime.
Student loan matching contributions
A provision that began in 2024 allows employers to match qualified student loan payments made by employees as if they were elective deferrals.
Expedited long-term, part-time employee eligibility
Eligibility for long-term, part-time employees to make 401(k) deferrals is expedited by shortening the eligibility period from three years to two years for plan years beginning after Dec. 31, 2024.
Emergency savings accounts
Plans may permit participants to make Roth contributions to an emergency savings account (ESA) in the plan of up to $2,500 maximum. Participants must be able to withdraw from the ESA at least once a month, and the 10% penalty for early withdrawal does not apply. These emergency savings provisions went into effect in 2024.
Deferral-only starter plans
Also effective in 2024, an employer that does not have a qualified retirement plan may establish a starter 401(k) or safe harbor 403(b) that permits only employee deferrals to automatically satisfy certain nondiscrimination testing requirements.
If I have questions, how do I get more information about SECURE 2.0?
Your plan’s third-party administrator (TPA) will be able to help you with questions about SECURE 2.0’s impact on your plan. If that TPA is Insperity Retirement Services, please contact your plan consultant in Insperity Retirement Services.
When will more information be available for SECURE 2.0?
Look for additional information to be shared as the effective dates of these changes approach.
What’s next?
Insperity is fully committed to working with our clients to help ensure compliance with all provisions required under the SECURE 2.0 Act.
Stay tuned for resources and updates regarding provisions going into effect in the coming months and years.