SECURE Act 2.0 Changes Impacting Employers in 2025

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The SECURE Act 2.0, passed late last December, builds upon the retirement savings reform outlined in the SECURE Act of 2019. The comprehensive legislation calls for changes designed to expand access to employer-sponsored retirement plans, make saving easier, and incentivize employers to start offering a plan. There are over 92 provisions included in the legislation, which reflects the comprehensive nature of the reforms highlighted within. As a result, not every provision is scheduled to be effective immediately, as many have effective dates in 2023, 2024, 2025, and beyond. As part of an ongoing series, JLK Rosenberger has provided a summary of the key provisions scheduled to be effective in 2025 below.

SECURE Act 2.0 – 2025 Provisions

• Automatic Enrollment – New 401(k) plans created after December 2022 must begin automatically enrolling participants at a rate between 3% -10% for elective deferrals. It must be increased annually by one percent each year to a ceiling of at least 10% to a maximum of 15%. It is important that employees have a 90-day opt-out period and can take a distribution of any automatic deferrals. This change is effective starting January 1, 2025.
• Catch-Up Contribution Increase – To help those close to retirement accelerate savings, the SECURE Act 2.0 raises the catch-up contribution limit to the greater of $10,000 or 150% of the regular catch-up contribution for participants aged 60 to 63. This change is effective starting January 1, 2025. It is important to remember that once a participant turns 64 years old, the regular catch-up limit applies.
• Long-Term Part-Time Workers – The original SECURE Act made changes that permitted long-term part-time employees to participate in an employer-sponsored retirement plan under certain circumstances. Participation is permitted when the employee completes one year of service (1000 or more hours in one year) or 500 hours of service in three consecutive years. Beginning in 2025, the three-year requirement will be changed to two years allowing quicker access. It is important to note that employers should be tracking work hours now to ensure proper compliance with the updated eligibility rules.
• Plan Amendments Adoption Deadline – It is common not to require the immediate adoption of plan amendments to conform with recently passed retirement legislation. This provision extends the remedial amendment period to the end of 2025. To ensure conformity, the same adoption deadline now applies to the original SECURE Act and CARES Act This assumes the plan is already operating in accordance with the requirements outlined in SECURE Act 2.0.
• Rollover Guidance – There is a requirement that calls on the Treasury Department to simplify and standardize the rollover process by creating sample forms that can be used by both the income and outgoing retirement plan/IRA. This change is designed to standardize the process participants can use when rolling retirement savings into a new account. The release of these forms must be completed by January 1, 2025.
• Paper Statement Requirement – SECURE Act 2.0 changes the rules regarding when and the number of paper statements that must be issued annually to participants. For defined contribution plans, the rules are updated to require a paper statement to be issued once per year unless otherwise directed by the participant. The rule has been updated for defined benefit plans, requiring a paper statement to be issued once in a three-year period. This change is effective for plan years starting in 2025.

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The SECURE Act 2.0 calls for several important changes to plan access, participation, and saving rules. New provisions go into effect each year, creating additional opportunities for employers and employees. If you have questions about the information outlined above or need assistance with your next retirement plan audit. JLK Rosenberger can help. For additional information, call 949-860-9902 or click here to contact us. We look forward to speaking with you soon.