The SECURE 2.0 Act is here: What does it mean for employee enrollment and
participation in defined contribution plans?

President Joe Biden signed the SECURE 2.0 Act of 2022 into law at the end of last
year, meaning changes are coming. But what does the act mean for employee
enrollment in defined contribution plans?
This retirement legislation will have a big impact on large and small plan sponsors – and
employee enrollment and participation in defined contribution plans. There are important
changes coming.
Some changes are mandatory; some are optional.
SECURE 2.0 requires automatic enrollment in certain new plans, namely new 401(k)
and 403(b) plans. Automatic enrollment isn’t anything new, and many employers do it
already. Now, this is mandatory for newly established plans, with certain requirements.
So, what does that mean? It means that a 401(k) or 403(b) plan that was newly
established on or after Dec. 29, 2022 must have certain requirements under the law. Of
course there are exceptions, namely, any plans in existence before Dec. 29, 2022. Also,
the mandatory rules don’t apply to government plans, church plans or SIMPLE 401(k)
plans. Some new or small businesses are also exempt.
SECURE 2.0 also makes changes to rules for long-term part-time employees. Namely,
it shortens the eligibility period from 3 years to 2.
These changes are meant to increase employee participation in plans – and boost
retirement savings.
And with regard to the optional changes, plan sponsors do have a range of plan design
opportunities to choose from.
Do you still have questions about retirement planning options?
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