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SECURE ACT 2.0: New Retirement Plan Incentives

December 15, 2021

There’s a potential game-changer being discussed when it comes to retirement savings. It’s called SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement Act), and it’s intended to help more Americans ensure they’ll have enough money during their retirement. The new measures of the SECURE Act 2.0 are designed to boost retirement savings, but some changes will be a bit difficult to put into place.  

  1. Mandatory Enrollment for Defined Contribution Plans – Under SECURE Act 2.0, employers that offer defined-contribution plans such as 401(k)s would be required to enroll eligible new employees automatically. Those employees would be enrolled at a contribution rate of 3%, similar to how many 401(k) plans operate now. But the annual contribution level would automatically be increased by 1% each year, maxing out at 15% of employee pay unless employees choose a different contribution rate.
  2. New Catch-Up Contribution Limits for 401(k) Plans – Employer-sponsored 401(k) plans have annual contribution limits, with separate catch-up contribution limits allowed for savers aged 50 and older. For 2021, the regular contribution limit is $19,500, while the catch-up contribution limit is an additional $6,500. SECURE Act 2.0 would introduce another catch-up contribution limit just for people aged 62 to 64. The limit, which would take effect in 2023, would allow those savers to add another $10,000 in catch-up contributions to their 401(k)s each year. The Act would also make all catch-up contributions subject to Roth guidelines for tax purposes.
  3. Increased Age for RMDs – The SECURE Act already pushed required minimum distributions back to age 72. And the 2.0 version would push them back to age 73 in 2022, then age 74 in 2029. Also, starting with the year 2032, savers wouldn't be required to take RMDs until age 75, offering a break to people who choose to delay retirement or want to draw down other retirement assets first.

Until it becomes law, you can still benefit from the provisions of the original SECURE Act, and if you haven’t started saving for retirement yet, now might be a good time to start. Call us today with any questions.


This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results.  Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.

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