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Concerned by alarming statistics showing that many Americans are underprepared for retirement, the federal government passed the SECURE 2.0 Act in 2022 to enhance retirement savings opportunities.
Some key provisions took effect on January 1, 2025, and while many have already been implemented, more are on the horizon. Here’s what advisors need to know and prioritize to help plan sponsors prepare for these changes. Secure 2.0 also allows advisors to help their clients reconsider their broader goals and objectives.
Higher catch-up contributions: Employees aged 60–63 will be eligible for increased catch-up contributions in 401(k), 403(b), and governmental 457(b) plans.
Mandatory auto-enrollment: New 401(k) and 403(b) plans must automatically enroll eligible employees unless they opt out.
Student loan matching: This optional provision allows employers to match student loan repayments with 401(k) contributions. It empowers workers who were not contributing to their 401(k) because student loan repayments were a higher priority, ensuring they don't fall behind in retirement savings.
Emergency savings accounts: Pension-Linked Emergency Savings Accounts (PLESA) can help employees build financial resilience and stop living paycheck to paycheck.
Leverage your recordkeepers and consultants: It is critical to collaborate with recordkeepers and consultants to understand implementation timelines and the availability of provisions.
What to ask: Plan sponsors should ask questions like, “What can be done to improve the plan and enhance outcomes?” according to Retirement Learning Center co-founder Andy Larson. By taking proactive steps, employers can ensure they’re well-positioned to maximize SECURE 2.0 and help their employees prepare for retirement.
Embrace the opportunity: It's time for organizations to see retirement plans as tools to further corporate goals like recruitment, retention, and fostering financial wellness instead of the generic, formulaic approach of the past. "A successful plan, ultimately, picks up the culture of an organization, hopefully, a positive culture, and drives itself where the employees are excited about it,” Larson said in an interview with Broadcast Retirement Network. "They encourage their new coworkers to participate; they understand what's going on. It gets a life of its own within the overall organization."
Don’t overlook education and communication: With Secure 2.0 in place, it is a great time to enhance or overhaul benefits communication and education so they focus more on employee needs and less on technical details. Advisors can help plan sponsors foster employee appreciation for the plan by brainstorming effective strategies for informing employees about the changes and how they may benefit from them.
Get ready for the 2026 amendments: Plan sponsors must amend their plans in 2026. The upcoming changes are complex, so discuss them with the plan sponsor and the recordkeeper as soon as possible.