SECURE 2.0 Act of 2022

SECURE 2.0 Act of 2022

What Is the SECURE 2.0 Act of 2022?

The SECURE 2.0 Act of 2022 is a law designed to substantially improve retirement savings options—including 401(k)s and 403(b)s—in the U.S. It builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. SECURE 2.0 was signed into law by President Joseph R. Biden on Dec. 29, 2022, as part of the Consolidated Appropriations Act (CAA) of 2023.1

The SECURE 2.0 Act began as two pieces of legislation, one from the House of Representatives (H.R. 2954) and one from the U.S. Senate (S. 1770).23 After both branches of Congress passed their respective bills, the consolidated legislation was included in the CAA omnibus budget bill as Division T (SECURE 2.0 Act of 2022).

Key Takeaways

  • SECURE 2.0 Act of 2022, part of the Consolidated Appropriations Act (CAA) of 2023, builds on and expands the SECURE Act of 2019 to improve retirement-savings opportunities.
  • The Act contains 92 new provisions to promote savings, boost incentives for businesses, and offer more flexibility to those saving for retirement.
  • Provisions include automatic 401(k) enrollment, an increase in the age for taking RMDs, significant tax benefits for employers, and much more.
  • The legislation in both chambers enjoyed broad bipartisan support.

Understanding the SECURE 2.0 Act

SECURE 2.0 was something both chambers of Congress wanted to see become law; bipartisan support was woven into both versions of the bill. The 103 sponsors of H.R. 2954 consisted of 55 Democrats and 48 Republicans. On the Senate side, six Republicans and five Democrats were co-sponsors of S. 1770.45

The SECURE 2.0 Act attempts to accomplish three goals: Get people to save more for retirement, improve retirement rules, and lower the employer cost of setting up a retirement plan. Some provisions are in effect (as of Jan. 1, 2023), while others will go into effect in 2024, 2025, and even later.

When Will Provisions of the SECURE 2.0 Act Take Effect?

That depends on the specific provision. Some take effect immediately, others begin in 2023, 2024, or even later. For example, automatic retirement plan enrollment doesn’t start until 2025, while the increase in age for RMDs from 72 to 73 began Jan. 1, 2023.

What Does SECURE 2.0 Have to Do With Social Security?

Almost nothing. One of the negatives about SECURE Act 2.0 is the fact that it does nothing to solve the problem of the Social Security Trust Fund, which is expected to run out of money in just over a decade.

The Bottom Line

Though cooperation between Republicans and Democrats in Congress remains at an all-time low, the SECURE 2.0 Act stands out as one of the few pieces of legislation in which both sides could, and did, find common ground.

As comprehensive as SECURE 2.0 Act of 2022 is, the new law falls short by its failure to address Social Security shortfalls. That said, its provisions provide a number of routes to improvement in the growth of the percentage of Americans with a retirement savings plan. Should that come to pass, it will be a welcome development.

Click here to learn more about Secure Care 2.0 Provisions for 2023 and 2024.