By Alonso Munoz
Exciting news: The 401(k) and retirement industry is in line for another round of legislative updates! The most immediate proposal in Washington is the SECURE Act 2.0. This is a follow up to SECURE Act signed into law in 2019.
Although this legislation is complex and lengthy, we have picked out several changes that are worth a glance for both participants and plan sponsors.
Auto-Enrollment — Congress will likely mandate auto-enrollment for eligible participants into their companies 401(k) Plan. The contribution amount (amount the employee puts in from their paycheck) would start at a minimum rate of 3%, which will auto increase by 1% annually until reaching 10%. This will impact all start up plans after the date of enactment. If you established your plan before the laws are passed, you will be grandfathered in and exempt from the mandate. If you do not want to participate, you can opt-out of your 401(k) program.
If you want to know more then reach out to our original blog — 401(k) Updates: SECURE Act 2.0 Insights