While the Securing a Strong Retirement Act of 2021 (also known as the SECURE Act 2.0), went into effect in December of 2019, it received unanimous approval by the House Ways and Means Committee in May.
See how much you know about it and the benefits it provides plan sponsors and participants by deciding whether the following statements are True or False. Then check your responses against the answers below.
- Employers with up to 50 employees will enjoy a pension plan start-up credit that covers 80% of their administrative costs for the first five years of their 401(k) plan starting in 2022.
- Auto-enrollment starts in 2025 for 401(k), 403(b) and SIMPLE plans.
- The 2.0 Act allows part-timers to contribute to a firm’s retirement plan earlier than the original Act.
Answers to the quiz
- False. While it’s true that small employers of up to 50 employees will enjoy a start-up credit beginning in 2022, it’ll cover 100% (not 80%) of administrative costs for the first three years (not five) of 401(k) plan implementation.
- True. Auto-enrollment does start in 2025 for those plans, but workers always have the option to opt out. The SECURE Act 2.0 requires firms to enroll participants at a minimum of 3% contribution rate to be increased by 1% every year up to 10%, but not more than 15%. Businesses with fewer than 10 employees, less than three years of existence, and churches and governments are exempt.
- True. Previously, employees were required to work 500 hours or more for three years. Now, it’s two.