Secure 2.0

Secure 2.0 legislation automatically enrolls some workers in retirement plans and raises the mandatory age for RMDs.

Ubiquity breaks down the legislation and some of its implications.

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Roughly half of Americans have no savings set aside for their golden years.

The recent retirement legislation, nicknamed Secure 2.0, takes aim at the impending retirement savings crisis.

Built on the foundation created by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, the new law encourages even greater savings while further lowering administrative costs for employers.

Automatic Enrollment

Employers adopting new SIMPLE, 403(b), or 401(k) plans are now required to include an auto-enrollment feature that sets participants up to contribute 3% of their total compensation toward retirement each year. These contributions will automatically increase by 1% per year to a maximum of 10%.

Employees still retain the right to opt out if they desire, though very few workers actually do. Existing plans will be grandfathered, meaning nothing has to change at the moment.

Non-exempt 401(k) plans established by December 29, 2022 must include automatic enrollment by December 1, 2025.


The original SECURE Act required that long-term, part-time workers become eligible for retirement plan participation if they have worked 500+ hours per year over the last three plan years, starting in 2021. Secure 2.0 goes one step further, shortening the period from three to two years, beginning in 2025.

Required Minimum Distributions (RMDs)

Previously, Americans age 72 and older must begin taking distributions from their retirement plans. This age increased from 70.5 under the original SECURE Act, starting in 2020. However, over a quarter of seniors ages 65-74 are still participating in the workforce, as well as 6.6% of those age 75 and older.

But now under Secure 2.0, Americans may delay taking distributions in the following ways:

  • For individuals who reach age 72 after December 31, 2022, and reach age 73 before January 1, 2033, they must start taking distributions at age 73
  • For individuals who reach age 74 after December 31, 2032, they must start taking distributions at age 75

Catch-up Contributions

Many people want to contribute more as retirement draws near. Participants in 401(k) and 403(b) plans are able to make additional catch-up contributions of $7,500 starting at age 50. This helps late starters save quicker, above and beyond the annual limit. Beginning in 2025, plan participants will have the option to increase catch-up contributions from the current $6,500 to $10,000 per year for those ages 62, 63, and 64. At age 65, the $6,500 allowance returns. These figures may be adjusted for cost-of-living increases.

Roth Options

Effective January 1, 2024, participants with over $145,000 in income will only have the option to contribute their catch-up as Roth – meaning that plan participants pay taxes on them now, but pay no taxes at withdrawal time.

Effective immediately upon adoption, plan sponsors may offer employees the option to put their matching contributions into Roth accounts.

Multiple Employer Plans

While the original SECURE Act made it easier for small business employers offering 401(k)s to band together in a single plan, Secure 2.0 makes 403(b) plans eligible to participate in Multiple Employer Plans (MEPs). Professional service providers take over the administrative burden, rather than individual employers.

Saver’s Credit

The Retirement Savings Contributions Credit (Saver’s Credit) gives low and middle-income individuals a tax credit worth up to $1,000 for making eligible contributions to an employer-sponsored retirement plan or IRA. Secure 2.0 raises the rate of the credit to 50% of what is contributed, regardless of income level, and increase the maximum credit to $1,500.

Plan Administration Costs

Certain plan objectives are aimed at simplifying administration to reduce total plan costs. Certain disclosure requirements are eased under the new proposal. Excise taxes for failure to make RMDs are reduced from 50% to 25%. The IRS Employee Plans Compliance Resolution System has been expanded and the requirements for recouping accidental overpayments have changed slightly.

Small Business Tax Credits

A tax credit worth 100% of the employer’s administrative expenses (to a maximum of $5,000) for the first three years is available for small business retirement plans with 50 or fewer participants. This is changed from the previous tax credit of 50% of the administrative costs (also capped at $5,000).

A brand-new tax credit for enterprises with 50 or fewer workers allows them to receive up to 100% of the amount they contribute on each employee’s behalf – capped at $1,000 per person. Businesses with 51-100 employees would receive a tax credit worth 100% of their contributions per employee in the first and second years, 75% in the third year, 50% in the fourth year, and 25% in the fifth year.

The $500/year auto-enrollment tax credit still applies for the first three years of a new plan as well.

Lost Benefits

Within three years of enactment of Secure 2.0, the Labor, Treasury, and Commerce departments will coordinate a searchable database for lost participant benefits. This publicly searchable repository of last resort for lost, uncashed retirement distribution checks could be a way for people to locate missing money they’d lost or forgotten about when changing jobs.

Secure 2.0 has increased the cap on mandatory distributions from $5,000 to $7,000. Under current rules, beneficiaries with accounts worth over $5,000 must consent to a distribution – either through a direct rollover to another account or a cash check. If the value is worth more than $1,000 and consent is not given, the benefit must be transferred to an IRA or other investment vehicle as designated by the plan administrator. With Secure 2.0, these smaller balances can be transferred to the Office of the Retirement Savings Lost and Found in the event a non-responsive participant cannot be reached to accept the distribution.

Take Full Advantage of Secure 2.0 with Help From Ubiquity

Ubiquity can help you take advantage of Secure 2.0 provisions to get the most out of your small business 401(k). Start your easy, low-cost retirement savings plan today and keep what’s yours with a flat, affordable, monthly fee.

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Setting up a 401(k) can be complicated. Only Ubiquity gives small business owners access to retirement experts in addition to industry-leading, low, flat fees. Each sales expert has over a decade of experience assisting business owners in 401(k) plan design. Take advantage of this free benefit.

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Learn more about Secure 2.0

Resources for small business owners looking to offer a retirement benefit to their employees


Ubiquity is not a registered investment advisor and no portion of the material herein should be construed as legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor for advice.

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© 2023 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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