Secure Act 2.0 of 2022 - Summary

The final version of the SECURE 2.0 Act was released on December 19, 2022 as part of the 2023 Omnibus Budget. You can find the full text here on pages 2046-2456. The whole bill is enormous at 4155 pages. Without opining about the whole bill, I support the provisions of SECURE 2.0 as an important set of advancements to expand workplace retirement coverage, increase savings among all workers and improve financial security. Does it close the racial wealth divide or guarantee financial security for all workers ? Not even close, but as a wise counselor said to me often "don't let the 'perfect' prevent us from enacting a 'good' bill."

The SECURE Act is a conglomeration of the US House bill, Securing a Strong Retirement Act (HR2954) the US Senate HELP committee's RISE & SHINE Act and the US Senate Finance Committee's EARN Act that were approved by their respective committees in March and June.

What's amazing about this bill is its bipartisan creation and support to advance financial security for all workers. Here's a brief summary of some of its major provisions and impacts that I've prioritized by impact on workers.

• Section 101 requires all new 401(k) and 403(b) plans, established after 2024, must have #automaticcontribution and #automaticescalation provisions with worker opt-outs and exceptions for grandfather plans, small business, new business, government plans and multiple employers plans. This provision will help expand participation and savings rates using lessons from consumer choice theory.
• Section 103 and 104 create an expanded, permeant and refundable #saverscredit match up to $2000 that can be deposited as a contribution. The credit is phased out for higher wage earners. The Bill also provides funds for public awareness of this credit.
• Section 127 creates and enables #emergencysavings accounts up to $2500 and enables an employer 401k match. I've talked and written about this before here .
• Section 115 enables workers to withdraw up to $1000 for #emergencysavings every three years without penalty or hardship application. This is separate and distinct from section 127.
• Section 110 enables employers to match workers' #studentloan payments as 401k contributions.
• Section 106 enables #MultipleEmployerPlans for 403bs. This provision enables small not-for-profits to pool their purchasing power in a single multiple employer 403b to gain economies of scale and transfer some fiduciary responsibilities to a professional. This should increase retirement plan coverage at competitive prices for small not-for-profits and schools. It has the potential to revolutionize the K-12 marketplace by mitigating school districts concerns about ERISA and thereby enabling them to move to a single provider without retail brokerage sales.
• Sections 108 and 109 expand Catch-Up Contribution limits.
• Section 125 reduces barriers for part-time workers to participate in 401k plans.

This bill is massive and complex. While the above are the major elements, the bill also contains provisions which:

• Instructs the Department of Labor to conduct various studies including updating fee disclosures, pooled employer plans, the impact of inflation and Pension Risk Transfer rules.
• Enables Starter 401k plans to enable workers contributions only
• Recognized tribal governments's ability to issue QDROs during divorce proceedings.
• Expands the age of ABLE plans from 26 to 46 in 2026.
• Expand the scope and impact of the Start Up Credit and Military Spouse Credits for small businesses. This provision will encourage additional coverage by small business.
• Change required minimum distributions (RMDs).
• Allow employers to offer small financial incentives to contribute to a plan.
• Modifies taxation of (a) certain sales of employer stock to employee stock ownership plan sponsored by an S corporation (b) annuitization of defined contribution plans, and (c) reducing some excise taxes
• Changes some technical definitions of Qualified Longevity Annuity Contracts to enable lifetime income with defined contribution plans and enables exchange traded insurance contracts.
• Some technical updates to the SECURE Acts provisions #PooledEmployerPlans regarding fiduciaries and start up credits in Section 105
• Provides assistance for helping find lost accounts by both (a) the Secretary of the Treasury regarding retirement plans and accounts and (b) States regarding savings bond owners
• Modifies rules relating to pension plans accidentally overpaying workers
• Provides for early retirement withdrawals for new parents, domestic abuse, disabilities, and federal disasters.

That's a very summarized list of some the major titles. There are many that I couldn't summarize here that will undoubtably continue to change the landscape of the retirement marketplace and savings environment of years to come.

Despite this success, more work is necessary to ensure financial security. Work like universal private and public #PaidFamilyMedicalLeave , #babybonds , and a permanent refundable child tax credit. But as I said in the beginning, this is a really good start that we should celebrate!