The SECURE Act 2.0 introduces significant changes in 2025 that will impact how employers manage retirement and benefits plans. These regulations aim to enhance retirement security and improve access to employer-sponsored retirement plans. Staying compliant with these changes is crucial for businesses to avoid penalties and ensure employees benefit from the new provisions.
Key Provisions Of The SECURE Act 2.0
Enhanced eligibility for part-time workers
Beginning in 2025, part-time employees who work at least 500 hours annually for two consecutive years will gain eligibility to participate in their employer’s 401(k) plan. This builds on the previous SECURE Act’s three-year requirement. Employers need to prepare by updating their tracking systems to identify eligible employees and ensuring enrollment processes are streamlined.
Automatic enrollment and escalation requirements
Newly established 401(k) and 403(b) plans must include automatic enrollment features. Employees will be automatically enrolled at a minimum contribution rate of 3%, with automatic annual increases of 1% until contributions reach at least 10%, but not more than 15%. Employers should review plan designs and payroll systems to ensure these requirements are met.
Emergency savings accounts
The SECURE Act 2.0 introduces optional emergency savings accounts linked to retirement plans. These accounts allow employees to save up to $2,500 annually on a Roth basis, providing a tax-advantaged way to address financial emergencies. Employers interested in offering these accounts must work with plan administrators to integrate them into their benefits packages.
Increased catch-up contributions
For employees aged 60 to 63, the catch-up contribution limit for 401(k) plans will increase to the greater of $10,000 or 150% of the standard catch-up contribution limit for that year. Employers must ensure payroll systems and retirement plan documents reflect these updated limits.
Student loan repayment matching contributions
Employers can now make matching contributions to 401(k) or 403(b) plans based on an employee’s qualified student loan payments. This provision incentivizes retirement savings while helping employees pay off student debt. Employers should consider whether this feature aligns with their benefits strategy and work with plan administrators to implement it.
How GMS Can Help Your Business Stay Compliant
Navigating these complex changes can be overwhelming, especially for small and midsize businesses. Group Management Services (GMS) provides the tools and expertise to help employers stay ahead:
- Compliance guidance: Our team monitors legislative changes to ensure your business complies with all SECURE Act 2.0 regulations. We help update plan documents, adjust eligibility criteria, and align payroll systems with the new requirements.
- Plan design and administration: We work with your business to design a retirement plan that meets regulatory standards and your employees’ needs. Our experts can also coordinate with plan administrators to integrate new features, such as emergency savings accounts and student loan repayment matching.
- Employee education and enrollment support: Educating employees about their retirement options is critical for participation. GMS provides resources to help employees understand new features and make informed decisions about their financial future.
- Payroll integration: GMS simplifies payroll integration for features like automatic enrollment, increased catch-up contributions, and eligibility tracking for part-time workers. Our comprehensive payroll solutions ensure a seamless transition to compliance.
Preparing For 2025
The 2025 changes under the SECURE Act 2.0 emphasize the need for proactive planning and compliance. Employers who act now can not only avoid penalties but also enhance their benefits offerings to attract and retain top talent. Partnering with GMS ensures your business is equipped to manage these regulatory changes with ease.
Contact GMS today to learn how we can help your business meet the requirements of the SECURE Act 2.0 and beyond.