401(k) auto-enrollment, retirement plan lost and found, among Secure 2.0 retirement measures

New retirement provisions, commonly known as SECURE 2.0, were included in the omnibus appropriations measure before Congress, setting the stage for people to save more easily for retirement.

SECURE 2.0, which is an update to the 2019 measure formally called Setting Every Community Up for Retirement Enhancement Act, is part of an omnibus package that also is expected to be voted on this week.

“Including Secure 2.0 retirement provisions in the last major legislation of the year means that Congress is poised to help millions more workers and retirees with significant improvements to the nation’s private retirement system,” said Paul Richman, chief government and political affairs officer of the Insured Retirement Institute.

“We expect that the legislation will add billions to the retirement savings for small business workers, part-time workers, employees with student loan debt, military spouses, low-income workers, and others. We are reviewing the approximately 100 retirement provisions in the measure with our members to understand the full implications,” Richman said.

SECURE 2.0 was cobbled together from different legislative proposals that came together as one plan. The overall omnibus package will need to be voted on by Congress and signed by President Biden before becoming law.

“Americans deserve dignified retirements after decades of hard work, and our bill is an important step forward. We are making significant progress for millions of low- and middle-income workers, who are far less likely to have retirement savings,” said Senate Finance Committee Chair Ron Wyden (D-Ore).

Included in the provisions are myriad changes, such as increasing the age for required minimum distributions (RMDs) to 75, allowing student loan payments to be treated as retirement plan contributions for the purpose of company matches, withdrawals for emergency expenses, automatic enrollment in retirement plans, higher catch-up contribution limits for older workers, and the creation of a retirement savings lost and found.

“We are grateful to the many members of Congress and staff who worked tirelessly to get SECURE 2.0 included in the omnibus legislation expected to be enacted this week,” said Brian Graff, chief executive of the American Retirement Association. “This important legislation will enhance the retirement security of tens of millions of American workers — and for many of them give them the opportunity for the first time to begin saving.”

The measure builds on the original SECURE Act, which was sweeping legislation that received broad support from consumer advocacy groups and special interest groups. AARP had said provisions in that original bill would reduce poverty risk among retirees and improve the nation’s financial security.

“These workers often have demanding, physical jobs, and depend solely on their Social Security income. For the first time, millions more workers would access resources for retirement and see federal retirement contributions year after year, even if they have no tax liability. These are reforms that will make a meaningful difference for workers who have struggled to save,” Wyden said.

The original SECURE Act came together after about 10 years of legislative wrangling, while SECURE 2.0 came together in about two years and built and expanded on the retirement reform efforts.

“It’s a really good day for a number of people. It’s a challenging environment with inflation up and the market turbulent. Anything we can do to make saving easier and make sure people don’t outlive their savings is huge. We’re really hopeful this gets signed into law,” said Josh Caron, vice president of federal affairs with Finseca, the financial services association. “There’s an awful lot of work in here, but it’s not the end of the work. There’s still more work to be done.”

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