Key SECURE 2.0 Provisions to Look Out for Right Now

Retirement industry experts revealed the new provisions of the SECURE 2.0 Act of 2022 that advisers should pay attention to in the first half of 2024 during a PLANADVISER webinar, “SECURE 2.0 Now,” held March 21.

Heather Bader, a partner in Faegre Drinker Biddle & Reath LLP, noted provisions with immediate impact, including the elevation of maximum cash-out thresholds for emergency savings and the introduction of emergency savings account withdrawals for personal crises.

“Currently, there’s the maximum cash-out of up to $5,000, where a plan sponsor can get that money out of the plan. … That’s been increased to $7,000, effective in 2024,” she said. “Domestic abuse victim distribution in 2024 [is also] in effect and eligible for plan sponsors to implement.”

Bader told the audience that there will be an uptake in automatic enrollment for new plans beginning after 2023. Starting in 2025, they will need to be automatically enrolling new participants between 3% and 10%.

She noted there is competing commentary in the industry as to whether a plan sponsor should “automatically enroll everybody since 2023” or just those entering the plan in 2025. The details may get further clarification from the U.S. Department of Labor, as some other provisions have done since SECURE 2.0 passed in December 2022.

LTPT Eligibility

Long-term part-time eligibility, made available in January, caught a lot of sponsors by surprise, added John O’Brien, director of retirement plan consulting at Venture Visionary Partners.

“We spend a lot of time talking about Roth capability for contributions on the employer side, getting clarification on the LTPT, what’s going to apply, how do they calculate and who are they supposed to consider,” he said.

In many cases, plan documents offer the ability to make the process more streamlined, rather than having to take hours to put everything in manually, according to O’Brien. On LPTP, Dawn McPherson, the director of retirement plan consulting at CAPTRUST, said reducing the length of time necessary for those employees to meet service requirements and ultimately participate in a plan is a great positive step.

“For our team that fields technical questions from advisers across the company, [LPTP] continues to be trending as one of the top categories of questions,” she said. “While it’s complex, I think, ultimately, it’s going to help us to provide a slight uptick in retirement savings.”

Student Loan Matching

McPherson said another provision to make note of is student loan matching in retirement plans; however, there is not as much discussion of the benefit as she expected.

“We are still having a lot of conversations around student loan matching and, so far in 2024, we’re seeing some adoption and implementation of the provision,” she said. “But as you would expect, the conversation is happening with our clients that are in industries where there are high numbers of individuals and higher dollar amounts of lingering student loan debt. However, it is still a top-three [provision] lately.”

The webinar is available on demand on PLANADVISER’s website.