The Securing a Strong Retirement Act of 2022 included in the omnibus spending bill includes five significant changes for employers and plan sponsors: Requires automatic plan enrollment for eligible employees as plan participants. Changes the eligibility requirements under 401(k) plans so that it is easier for part-time employees to participate. Includes a new employer match for student loan payments and addresses how to factor student loan payment matching contributions into a plan’s discrimination testing. Creates new starter 401(k) plans for employers without retirement plans. Increases “catch-up” contributions and modifies required minimum distributions.

As part of the omnibus spending bill passed in a frenzy before the holiday break, Congress included the Securing a Strong Retirement Act of 2022 (“SECURE 2.0 Act”). This new law contains several changes that will have a profound impact on the rules governing retirement plans. This Insight summarizes the top five provisions affecting plan sponsors and participants.

1. Mandatory Automatic Enrollment in New 401(k)

The SECURE 2.0 Act requires new 401(k) plans to automatically enroll eligible employees as plan participants. This is a significant change. Previously, employers were not required to automatically enroll employees, although they had the option to set up their plans do so. The new law changes this default, but only for plans established after the new law takes effect and only for plan years beginning 2025...

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