On March 29, 2022, the House of Representatives passed the Securing a Strong Retirement Act of 2022 (“SECURE 2.0”, HR 2954). The vote was largely supported by both parties (414-5). The Senate will likely act on the bill later this spring. While we expect several changes in the Senate version, it is widely anticipated that the legislation will ultimately become law in some form. Below we highlight a few provisions of the bill we believe are of interest to employers.
For plan years beginning after December 31, 2022, SECURE 2.0 would mandate automatic enrollment in 401(k) and 403(b) plans at the time of participant eligibility (opt-out would be permitted). The auto-enrollment rate would be at least 3% and not more than 10%, but the arrangement would need an auto-escalation provision of 1% annually (initially capped at 10%). Auto-enrolled amounts for which no investment elections are made would be invested following Department of Labor Regulations regarding investments in qualified default investment alternatives. Plans established before the enactment of the legislation would not be subject to these requirements. Additional exclusions also apply.
For certain retirement plan distributions required to be made after December 31, 2021, for participants who attain age 72 after such date, the required minimum distribution age is raised as follows: in the case...
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