What’s Next for SECURE 2.0 in 2024

Quick look: Retirement savings have always been a significant part of the benefits conversation. With the passing of the SECURE 2.0 Act in late 2022, sweeping changes to 401(k) plans went into effect at the beginning of this year. Now, as 2024 rapidly approaches, there are even more changes underway to be aware of to help set up clients and their employees for success. 

The next phase of changes for SECURE 2.0 is nearly here, and brokers have been preparing their clients for the transition. SECURE 2.0 was introduced to help people save more for retirement by improving retirement rules and lowering the employer cost of setting up retirement plans. 

While many provisions took effect immediately, others are being rolled out in the coming years.

For example, in 2023, the required minimum distribution age increased from 72 to 73, giving individuals an additional year to delay taking a mandatory withdrawal from their retirement accounts. However, 2024 brings a different set of changes, particularly for those not yet near retirement age.

Therefore, knowing what’s coming in 2024 is important to stay competitive (and compliant) as brokers guide clients on such an impactful part of their financial future.

Key changes taking effect January 1st

Retirement savings plans are one of the most competitive benefits employers can offer today. And it’s necessary to understand how SECURE 2.0 plays a role in giving employees a better chance at funding a nest egg for their future. 

Here are a few of the key SECURE 2.0 changes soon taking effect and what it means for brokers, their clients, and employees.

Contribution limits

The Internal Revenue Service recently announced it will increase the individual 401(k), 403(b), and most 457 contribution limits from $22,500 to $23,000 in 2024. Additionally, IRA contributions for individual retirement accounts will increase from $6,500 to $7,000 for those under the age of 50.

Emergency savings

Participants in employer-sponsored retirement savings plans may have the option of linking emergency savings accounts. Those who participate can make Roth pay-ins to the savings account (on a post-tax basis) within the plan before reaching an account balance maximum of $2,500. Additionally, up to $1,000 can be withdrawn from a 401(k) or IRA without penalty, even when a person has yet to reach 59 ½ years of age.

Student loan debt

Relief from some student loan debt will become available through employer-sponsored retirement plans by matching contributions linked to a participant’s student loan repayments. This helps employees who are trying to pay off debt while simultaneously saving for retirement have a better chance at meeting both financial goals.

Automatic enrollment

Automatic enrollment is one of the biggest changes on the horizon in 2024. Though the SECURE 2.0 provisions won’t go into effect until 2025, it’s best for broker clients to prepare now. Starting in 2025, businesses who offer 401(k) and 403(b) plans must automatically enroll eligible employees and provide a contribution rate of at least 3%.

How a PEO can help keep clients compliant

Changes in the law means re-evaluating compliance. With only a few weeks left in 2023, ensuring everything is in place come January 1st is critical. At the same time, expanding benefit offerings in the new year should be part of the conversation as well. Financial wellness and debt relief programs, in particular, are valuable to employees and factor into their overall job satisfaction. 

Connecting clients with a professional employer organization (PEO) provides a competitive advantage and ensures they stay compliant as retirement rules go into effect. A PEO partner can help brokers and their clients with: 

Differentiating between required and optional provisions

Under SECURE 2.0, there are hundreds of provisions to navigate, some of which are required by businesses. Knowing which must be acted upon versus which are kept optional is essential to keep companies compliant. Since the rollout of SECURE 2.0 continues through 2025, it’s also important to know key dates and prepare accordingly. 

Expanding benefit offerings

Over the past few years, brokers have worked closely with their clients to revamp benefit offerings to meet modern demands. A PEO partner collaborates closely with companies to customize benefit plans to fit specific budgets and needs. These plans include financial wellness offerings, such as 401(k) plans and student loan debt relief initiatives, among others. 

Staying competitive in fast-growing market

The benefits market is rapidly expanding, and for small- and medium-sized businesses (SMBs), it can be a challenge to keep up with larger companies. A PEO partner offers Fortune 500-level benefits for SMB leaders, enabling them to stay competitive and give their employees greater opportunities. Additionally, the variety of benefits give employees more personalized options which are relevant to their own financial wellness journeys.

Accessibility to financial tools and resources

Though SECURE 2.0 is the biggest legislation for the retirement savings industry in recent time, there are always updates on what’s available and what SMB clients and their employees need. With a PEO partner, brokers and business leaders can maintain compliance and keep up on trends.

Doing things differently in the new year

There are only a few weeks left until the calendar year rolls over to 2024, which then ushers in an opportunity for fresh starts and meaningful changes. As a PEO partner, ExtensisHR is equipped and ready to collaborate with brokers and their clients to help them reach their business goals for the new year and beyond.

In addition to delivering an extensive list of benefit services, ExtensisHR also offers HR administration and guidance, payroll and tax management, risk and compliance expertise, recruiting services, and proprietary HR technology as part of a comprehensive PEO solution. With a results-oriented, person-to-person approach, each plan is tailored to a company’s most pressing needs. 

Find out how a partnership can strengthen your portfolio and give you an extra advantage as a broker. Contact our team of HR experts today.