A new provision stipulated in the SECURE Act 2.0 is perhaps being overlooked as the windfall it is. Per the changes in the law, employers will now be able to provide employees with the option to receive both matching and nonelective contributions to a Roth account for their 401(k)/403(b)/457(b) plans.
WASHINGTON, Feb.9, 2023 /PRNewswire-PRWeb/ -- A new provision stipulated in the SECURE Act 2.0 is perhaps being overlooked as the windfall it is. Per the changes in the law, employers will now be able to provide employees with the option to receive both matching and nonelective contributions to a Roth account for their 401(k)/403(b)/457(b) plans. The new legislation was passed as part of the omnibus spending bill on December 29, 2022, and presents an opportunity for workers to avoid some major taxation in their retirement. Under prior law, all employer contributions had to be deposited to a traditional accounts (pre-tax), not a Roth—(employees could choose a Roth account for their contribution, but the employer could not). For it to be the intended boon, employers need to step up and change their plan's documentation as this is an optional provision for employers. Employees won't have this option immediately unless their employer has changed their plan offering. Albeit not required to do this, the pressure on employers to make the accommodation available should be ramped up.
It is truly for the best interest of America's workforce that employers amend their plans promptly....
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