Advisors, plan sponsors dig into the many, many provisions of SECURE 2.0

The retirement savings legislation signed into effect by President Biden last week as part of a government funding bill includes 92 provisions designed to boost the number of Americans saving for retirement, as well as the size of their nest eggs.

The devil, as they say, is in the details, and that means advisors and plan sponsors seeking to maximize the benefits from the recently enacted SECURE Act 2.0 better start digging deep into the law’s numerous, minutiae-filled provisions.

The comprehensive retirement savings legislation signed into effect by President Biden last week as part of a $1.65 trillion government funding bill includes 92 provisions designed to increase the number of Americans saving for retirement, as well as the size of their nest eggs.

Among its many provisions, SECURE Act 2.0 mandates auto-enrollment for new plans, increases catch-up contributions for certain workers, allows for matching contributions to be applied for qualified student loan payments, increases the age for required minimum distributions and permits the establishment of emergency savings accounts linked to individual retirement plans.

“Many of these provisions should help participants save more for retirement,” said Mike Moran, senior pension strategist at Goldman Sachs Asset Management. “They also acknowledge that retirement saving intersects with other financial priorities that individuals face throughout their working years, such as student loan repayments and emergency expenses.”


Section 121 of the Act, for example, permits an employer that doesn’t sponsor a retirement plan to offer a starter 401(k) plan or a safe harbor 403(b) plan. Either one of the two options would generally require that all employees be default-enrolled in the plan at “a 3 to 15 percent of compensation deferral rate.”

The provision goes on to say that the limit on annual deferrals would be the same as the IRA contribution limit, which for 2022 is $6,000 with an additional $1,000 in catch-up contributions beginning at age 50. Section 121 is effective for plan years beginning after Dec. 31, 2023.

Joe DeBello, managing consultant at strategic advisory shop OneDigital, believes the tax benefits associated with the new law will undoubtedly encourage business owners currently not offering retirement plans to start rolling them out.

“The Starter (k) provisions provide an easy-button option for employers to easily take advantage of newly enacted tax credits and avoid the hassle of complicated administration associated with legacy plan designs,” DeBello said, adding that the American Retirement Association estimates that the Starter (k) alone will provide retirement plan access for 19 million more Americans.

Coleman Benko of Benko Financial Services calls the tax credits for start-up qualified plans with auto-enrollment of employees a “game changer.”

“I believe many of my small business clients now have the incentive to put a retirement plan in place that will benefit the employees tremendously,” Benko said. “This type of credit offsets the out-of-pocket expense to employers that is often a barrier to entry.”


At the very top of the list of provisions, the SECURE Act 2.0’s authors spell out their intent to expand coverage through automatic enrollment, citing studies showing how a mandatory opt-in program significantly increases retirement plan participation. Section 101 requires 401(k) and 403(b) plans to automatically enroll participants in the plans once they become eligible, while enabling employees to opt out of coverage.

“We know that individuals who save early in their careers have an advantage over those who start saving later,” said David Scranton, CEO and founder of Sound Income Group. “The Secure Act 2.0 will help build retirement portfolios by allowing more workers to participate and allowing employers to auto-enroll employees into programs.”