3 Ways the Passing of the SECURE Act 2.0 May Impact Your Business

The passing of the original SECURE Act in December 2019 was designed to improve retirement savings opportunities for workers. But the law was widely criticized for being too complicated and difficult to navigate. This March, the House of Representatives passed the SECURE Act 2.0.

The new bill, which promises to make much-needed changes to the current retirement system, is now up for discussion in the Senate’s Committee on Finance. If it becomes law, what will it mean for small business owners and employee benefits plans? Here are three ways SECURE Act 2.0 may impact your business.

1. Expansion of retirement benefits to part-time workers. Part-time workers have long been at a disadvantage when it comes to saving for retirement. With the proposed changes, workers would be able to participate in their employer’s 401(k) plan and also be eligible for matching contributions.
2. Increase in the age for required minimum distributions (RMDs). The age at which people have to start taking distributions from their retirement accounts has been raised from 70½ to 72. This change will allow people to keep their money in their retirement accounts for longer, giving them more time to grow their savings.
3. Create a “safe harbor” for businesses. Under the current law, employers could be subject to penalties if they do not correctly administer automatic enrollment and escalation features. The new legislation would create a “safe harbor” for businesses that offer automatically enrolled 401(k) plans, protecting businesses from certain penalties if their employees do not participate in the plan.