SECURE 2.0 – The Countdown Is On!

Although many plan sponsors are already in operational compliance with the various SECURE 2.0 provisions, an important hurdle remains: these updates must be formally adopted and in official plan documents by December 31, 2026. While this deadline may seem distant (after all, it’s only summer, right?), it will be here before we know it. And it’s no secret that administrative, compliance, and audit preparations take significant time. Now is the perfect time for sponsors to:

• Evaluate what provisions have already been implemented vs. formally adopted;
• Touch base with service providers and advisors;
• Identify/assess any deficiencies in compliance or documentation; and
• Develop a timeline for formal plan amendments.

Plan sponsors should take their time with these tasks – don’t wait until Q4! The most effective sponsors get a head start to avoid any last-minute stress.

Mandatory Provisions

To ensure one’s retirement plan remains compliant, certain SECURE 2.0 requirements will need to be formally updated/added to plan documents, even if they have already been in practice “operationally.” Depending on the plan design, some of the key provisions to consider include:

• Automatic Enrollment and Escalation
  • Requires 401(k) and 403(b) plans established after December 29, 2022, to automatically enroll eligible employees; the initial default deferral rate must be set between 3% and 10%, with a mandatory annual escalation of 1% until it reaches a maximum cap of 10% to 15%; effective for plan years beginning after December 31, 2024.
• Requirement Minimum Distributions (RMDs)
  • Increases the age for RMDs from 72 to 73, eventually to 75 in 2033; modifies when participants must begin taking payouts and updates plan distribution tracking.
• Expanded Eligibility for Long-Term Part-Time Employees
  • The eligibility requirement has been reduced from three consecutive years to two years of 500 hours each; effective for plan years beginning after December 31, 2024.
• Top-Heavy Testing Changes
  • Helps to expand participation by allowing plans to exclude certain employees from testing; effective for plan years beginning after December 31, 2023.
• Birth and Adoption Distribution Repayment Limits
  • Imposes a 3-year limit to repay qualified birth and/or adoption distributions; applies retroactively and prospectively.
• Elimination of Roth RMDs
  • Aligns with Roth IRA treatment; effective for tax years after December 31, 2023.
• 403(b) Plan Hardship Rule Alignment
  • Aligns 403(b) plan hardship rules with 401(k) plan rules; effective for plan years beginning after December 31, 2023.
• Roth Catch-Up Contribution Requirements
  • Effective for tax years beginning after December 31, 2025, catch-up contributions for higher-income participants must be designated as Roth (after-tax). This applies to employees who earned more than $145,000 (subject to cost-of-living adjustments) in the preceding calendar year.

Optional Provisions

SECURE 2.0 also included a number of optional provisions, which require sponsor elections. Several are listed below. Not every available provision is a good fit for every plan. Before adopting new options, sponsors should review their current operations and carefully evaluate participant demographics, administrative complexity, payroll logistics, and service provider capabilities.

• Student loan matching contributions
• Roth employer contributions
• Emergency savings and withdrawal provisions
• Expanded hardship withdrawal options
• Increased involuntary cash-out limits
• Enhanced catch-up contribution opportunities

For many plans, the most important SECURE 2.0 decision is not simply signing the amendment – it is understanding what elections are being made and whether plan operations are prepared to support those elections. Plan ahead now to stay compliant, reduce risk, and build a strong foundation for future success.

Please contact us if you have questions about the information outlined above; our seasoned and experienced employee benefit plan professionals are here to help.  You can also learn more on our Employee Benefit Plan services page.

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