Understanding the SECURE 2.0 Act: Impact on Employer-Sponsored 401(k) Plans

September 13, 2023

The recent enactment of the SECURE Act 2.0 has brought forth substantial changes that directly impact employer-sponsored 401(k) plans. You might be wondering how these changes will affect your current plan and what adjustments you need to consider. Let’s break down the key modifications that are set to unfold in the coming years.


Expansion of Eligibility for Part-Time Workers

One notable change revolves around part-time workers. Under the SECURE 2.0 Act, individuals working 500-999 hours annually for two consecutive years will now be eligible to participate in a company's 401(k) plan. This expanded eligibility aims to provide greater access to retirement benefits for a broader spectrum of employees.

Enhanced Support for Small Businesses


Starting in 2023, small businesses will receive increased support through a credit that covers up to 100% of the expenses associated with establishing a retirement plan. This provision aims to incentivize small enterprises to provide retirement benefits for their employees, fostering a more secure financial future.

Choice in Contribution Allocation


Another significant change allows employers to offer their employees the option of receiving vested matching contributions in Roth accounts. This flexibility empowers employees to tailor their retirement savings strategies to align with their financial goals and preferences.

Automatic Enrollment Mandate


By 2025, a pivotal change will mandate employers to automatically enroll employees in 401(k) and 403(b) plans. Exceptions exist for smaller businesses (those with less than ten employees), churches, and governmental plans. This step aims to bolster retirement savings by encouraging increased participation among employees.


These changes bring both opportunities and considerations for employers managing 401(k) plans. As these alterations may necessitate adjustments in your existing plan structures, it's crucial to navigate them effectively to ensure compliance and optimize benefits for your workforce.


Should you have any queries or require assistance in understanding and implementing adjustments in light of these new legislative changes, our team is here to help. We welcome the opportunity to discuss these changes, evaluate your plan, and ensure it aligns with the updated regulations.


Remember, staying informed and proactive is key to navigating these changes seamlessly.

Optimizing Your Employer-Sponsored Retirement Plan: Best Practices

By Doug Kronk • June 26, 2024
As a small business owner, offering a comprehensive 401(k) plan is a key strategy to attract and retain top talent while promoting long-term financial health for your employees. Here are five best practices to ensure your plan is effective and beneficial for everyone involved: 1. Automatic Enrollment Automatic enrollment is a powerful tool that can significantly boost participation rates in your 401(k) plan. By making it the default option, employees are automatically enrolled unless they opt-out. This approach has been proven to be effective: 84% of employees with auto-enrollment participate in their 401(k), compared to just 37% without it. 2. Matching Contributions Offering matching contributions not only incentivizes employees to save more for retirement but also helps attract and retain top talent. On average, employers match 4.5% of their employees' contributions, according to a 2021 report from Vanguard. This can significantly enhance the retirement savings of your employees and demonstrate your commitment to their financial well-being. 3. Financial Education and Guidance Providing financial education and guidance can empower your employees to make informed decisions about their retirement savings. This can include educational materials, seminars, and complimentary one-on-one consultations with a financial advisor. By equipping your employees with the right knowledge, you help them maximize the benefits of their 401(k) plan and improve their overall financial health. 4. ESG Options Incorporating socially responsible investment options, also known as ESG (Environmental, Social, and Governance) funds, can appeal to employees who prioritize ethical investing. ESG options are particularly popular among younger workers, with 52% of Millennials investing in these funds, compared to 32% of Gen X and just 14% of Boomers. Offering these options can enhance employee satisfaction and engagement with the retirement plan. 5. Low Fees High fees can erode retirement savings over time, so it's crucial to offer a 401(k) plan with low fees. Evaluating and comparing the fees of different plans can help ensure that your employees retain more of their hard-earned money. This not only benefits them but also reinforces your role as a responsible and caring employer. The Importance of Benchmarking Your Plan Benchmarking your 401(k) plan is essential to ensure it remains competitive and effective. We recommend benchmarking your plan annually, but no less often than biennially. This process involves comparing your plan’s features, fees, and performance against industry standards and other similar plans. Regular benchmarking helps identify areas for improvement, ensures compliance with regulations, and keeps your plan attractive to current and potential employees. Encouraging plan sponsors to routinely have their plans benchmarked by outside professionals, such as ourselves, ensures that they are staying in good graces regarding their ERISA responsibilities. This external review can provide valuable insights and help maintain the highest standards for your retirement plan. If you have any questions about these 401(k) best practices or would like to discuss how to improve your current plan, please don’t hesitate to reach out. We are here to help you navigate the world of retirement planning and ensure your plan meets the needs of both you and your employees. Schedule a Consultation/Meeting with us today to learn more about optimizing your employer-sponsored retirement plan.

How “Higher for Longer” Interest Rates Can Impact Your Investments

May 2, 2024
The stock market has had a rough ride this past month. The S&P 500 index closed out April at 5035.69, down over 200 points (-4.2%) since the close of March. Investors have become pessimistic and frustrated, and it’s largely because the deep interest-rate cuts that the market expected early in the year just aren’t materializing. The “good news” coming out of the Fed’s May 1 meeting was that Chairman Powell didn’t see any new rate INCREASES on the horizon. While there will certainly be opportunities to make money in a high interest rate stock market, investors would be well-served to evaluate their holdings and potentially make some changes.