For sponsors of employer retirement plans, the landscape shifted significantly in 2022 with the passing of the SECURE Act 2.0. This sweeping bill introduced many changes to corporate retirement plans that were intended to help employees save more efficiently.
SECURE Act 2.0 changes are being implemented in phases, and the timeline was further muddied by delays of key provisions. To help you keep track, we have compiled a list of changes that sponsors must – or in some cases, have the option to – integrate before 2026.
2025: Automatic Enrollment and Escalation in New Plans
Research has shown that automatically enrolling participants in a corporate plan leads to higher savings rates. This past success with voluntary automatic enrollment features led the IRS to make this provision mandatory for new plans.
Most new plans must automatically enroll employees at a rate between 3% and 10% of their compensation – known as salary deferrals. These deferrals must also automatically increase each year by at least 1% until the deferral rate reaches 10%. Plan sponsors can choose to further increase the automatic deferral rate, but they can’t set it above 15%.
Automatic enrollment applies to most new plans established since December 29, 2022, and must have been in place as of December 31, 2024. However, there are some exceptions to this requirement:
- plans that were established before December 29, 2022
- small businesses with 10 or fewer employees
- new companies that have been in existence for less than 3 years
- certain churches and government entities (refer to the IRS website for details)
As always, employees are free to choose their own contribution rate that differs from the automatic one. They are also free to opt out of participating in the plan altogether.
2025: Expanded Eligibility for Long-Term, Part-Time Workers
The original SECURE Act – also known as SECURE 1.0 – introduced a rule allowing long-term, part-time employees to participate in their company’s retirement plan. Those who were eligible had worked at least 500 hours in three consecutive years. The SECURE Act 2.0 shortened this timeframe to two consecutive years where the employee completes at least 500 hours of service.
Part-time worker eligibility is another provision that should already be in place, since it took effect for plan years beginning after December 31, 2024. Eligible part-time employees must be allowed to participate in the plan, but employers aren’t required to make contributions on their behalf.
2025: Higher Catch-Up Contribution Limits for Ages 60-63
Employees aged 50 and older have been eligible to make catch-up contributions since the Economic Growth and Tax Relief Reconciliation Act of 2001. After the SECURE Act 2.0, plan sponsors have the option of offering an increased catch-up contribution limit for participants who turn 60, 61, 62, or 63 during the plan year.
The updated law states that the higher catch-up contribution limit will be the greater of $10,000 or 150% of the regular age 50 catch-up limit. Since the standard catch-up limit for 2025 is $7,500, the age 60-63 catch-up limit is $11,250.
Employers have the option to offer these higher catch-up limits to their employees for tax years beginning after December 31, 2024. Those who choose to offer them should also plan to adapt to mandatory Roth catch-up rules for high earners.
2026: Mandatory Roth Treatment of Catch-Up Contributions for High Earners
In the past, employees were able to designate catch-up contributions as Traditional or Roth. The SECURE Act 2.0 forces employees with FICA wages over $145,000 – indexed for inflation – to designate catch-up contributions as Roth.
The new rules further state that if these high earners are allowed to make Roth catch-up contributions, then all employees must be allowed to do the same. This indirectly requires employers who have catch-up eligible staff with salaries exceeding the $145,000 threshold to incorporate a Roth feature into their plans.
This provision of the SECURE Act 2.0 was initially slated for 2024, but it was delayed, giving employers more time to prepare. It must now be implemented for tax years beginning after December 31, 2025.
2026: Paper Statement Requirements
As of the Secure Act 2.0, Defined Contribution Plans must provide a paper statement at least once per calendar year. Defined Benefit Plans have a more lenient requirement to provide at least one every three calendar years.
These paper statement rules take effect for plan years beginning after December 31, 2025, and are subject to two exceptions. First, the requirement doesn’t apply if a participant affirmatively elects to receive statements electronically. Second, there are exceptions for employees who do not have a mailing address on file and for whom the plan has taken reasonable steps to obtain one.
The Critical Plan Amendment Deadline
For most mandatory and optional SECURE Act 2.0 provisions, employers generally have until the end of the 2026 plan year – December 31, 2026, for calendar year plans – to formally amend their plan documents. This deadline may be extended to 2028 for collectively bargained plans and 2029 for certain governmental plans.
Even though the formal amendment deadline is in the future, plan sponsors must operate their plans in good faith compliance with the provisions as of their respective effective dates. This means systems, processes, and employee communications must align with the new rules from the moment they take effect.
Meld Helps Employers Meet Their Sponsored Plan Responsibilities
At Meld Financial, our team of tax, legal, and investment professionals come together to help plan sponsors manage their responsibilities and enhance their plans. Clients receive objective advice from our team, support managing a custodial relationship, access to a robust variety of investment options, and valuable employee education.
We also publish articles, including an annual checklist for employer sponsored plans, to help manage critical responsibilities efficiently. To learn more about how we help plan sponsors, contact a member of our team today.
