Compliance Stuff

The  SECURE 2.0 Act of 2022 (SECURE 2.0) introduced  major changes to 401(k) plans, especially for small businesses. Three major changes take effect for plan years beginning after December 31, 2024 (January 1, 2025 for a calendar-based plan). They relate to automatic enrollment, long-term part-time eligibility, and catch-up contributions. As a small business owner, it’s crucial to understand the changes to ensure your 401(k) plan is compliant. Below we break down the SECURE 2.0 changes that will affect 401(k) plans for 2025, including practical steps to meet their requirements. If you need further assistance, contact your 401(k) provider. Automatic Enrollment in New Plans Automatic enrollment  is a 401(k) plan feature that automatically enrolls eligible employees at a preset default contribution rate, unless they actively opt out . The feature aims to simplify participation and increase retirement savings rates among employees. What’s New for 2025 SECURE 2.0 requires new ...

  Several provisions of the   SECURE Act 2.0 , passed in 2022, will take effect in 2025. Plan sponsors of defined benefit (DB) and defined contribution (DC) plans should begin reviewing the following changes to ensure compliance and address any questions before the new rules take effect. Mandatory Automatic Enrollment for DC Plans Under SECURE 2.0, 401(k) and 403(b) plans established after Dec. 29, 2022, will be required to implement an eligible automatic contribution arrangement (EACA) for plan years beginning after Dec. 31, 2024. This provision also applies to multiemployer DC plans that add a 401(k) feature. However, these multiemployer plans face challenges due to the complexity of coordinating payroll, tracking deferrals, and managing compliance for employees working for multiple employers. Congress is considering, but has not yet acted on, a technical corrections bill to SECURE 2.0 to provide technical amendments, clerical amendments, and clarifications of the law. This ...