What benefits will the updated SECURE Act 2.0 provide firms?

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.

1. 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.
2. Auto-enrollment starts in 2025 for 401(k), 403(b) and SIMPLE plans.
3. The 2.0 Act allows part-timers to contribute to a firm’s retirement plan earlier than the original Act.

Answers to the quiz

1. 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.
2. 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.
3. True. Previously, employees were required to work 500 hours or more for three years. Now, it’s two.

Info: Top SECURE Act 2.0 benefits for plan sponsors and participants

Renee Cocchi

Renée Cocchi has a passion for learning and helping other professionals do their jobs more effectively and efficiently. She earned her Master's Degree from Drexel University, and she’s spent the past few decades working as a writer and editor in the publishing industry. Her experience covers a wide variety of fields from benefits and compensation in HR, to medical, to safety, to business management. Her experience covers trade publications, newsmagazines, and B2B newsletters and websites. When she's not working, she spends her free time just chilling with her family and volunteering at a local dog shelter. Her goal in life is to help all shelter dogs get happy, loving homes!