The retirement planning landscape for 2024 has undergone significant changes.
This is primarily due to the implementation of the SECURE 2.0 Act, which brings about a variety of adjustments aimed at enhancing retirement savings opportunities for employees and offering more flexibility for employers.
SMB owners may want to adjust their retirement plans to take advantage of the new tools available to them. Here’s everything you need to know.
The SECURE 2.0 Act represents a pivotal piece of legislation that will significantly reshape the retirement plan savings landscape in the United States.
The act is an update to the original SECURE Act that was passed in 2019. It introduces various provisions to increase access to retirement plans, promote saving, and offer more flexibility for savers.
Here are some of the key provisions that employers should be aware of:
Employers offering 401ks and similar plans must now allow part-time employees to participate.
More specifically, part-time employees who have completed at least 500 hours of service per year for three years, beginning on or after January 1, 2024, must be allowed to make elective deferrals. This is true even when the plan provides a longer service requirement for deferral eligibility.
Effective next year, the rule will require only 2 years of 500 hours of service per year.
RMDs have undergone two major changes designed to increase retirement savings and provide more time for tax-free growth of investments:
Two major changes were implemented to increase the flexibility of employer retirement savings accounts, potentially improving the odds that employees will feel comfortable contributing to these accounts.
Both of these changes should increase the liquidity of savings for non-highly compensated employees.
The SECURE 2.0 Act includes two changes directly aimed at increasing employee participation in retirement savings plans:
Finally, two other notable provisions are aimed at increasing the amount of money employers keep in their IRA and Roth retirement savings accounts.
The wide range of new options and incentives were designed by Congress to strengthen the retirement security of millions of Americans.
Employers and plan sponsors must navigate these changes and update their practices to comply with these new rules.
Thanks to SECURE 2.0, employers and employees will have many new retirement plan options to choose from in 2024.
Retirement plan administrators will make the changes necessary to their plan offerings to remain compliant with the new laws, but that doesn’t mean SMB owners won’t have some major decisions to make.
Employers are ultimately responsible for their retirement plans' compliance with federal regulations, so SMB owners must decide how best to update their plan features to meet those new requirements.
This includes deciding whether to adopt optional provisions, such as offering emergency savings accounts or matching contributions for student loan payments.
The process of ensuring that 2024 retirement plans are compliant with SECURE 2.0 will be a collaborative effort between employers and their third-party administrators (TPAs).
SMB owners should establish an open line of communication with their TPA and actively communicate about any necessary changes to plan details and elections.
Both employers and TPAs have a crucial role to play in achieving compliance with SECURE 2.0. Yet, all of the hard work that SMB owners will put into their retirement plan options this year is sure to change again in the future. The SECURE 2.0 Act even has some changes that have been deferred until January 1, 2025.
How can you stay on top of these changes? Work with a PEO like BBSI.
At BBSI, we’re in the business of staying current on the latest retirement plan laws and regulations so that SMB owners can focus on doing what they do best: growing a profitable company.
Our full-service retirement plans are designed to eliminate administrative burdens and prioritize your employees’ financial wellness, helping you attract and retain the best talent available.
If you’re looking for a PEO that can offer flexible plan options and hassle-free plan administration, reach out to BBSI today.