SECURE 2.0: From Complex Legislation to Practical Implementation
The retirement landscape is undergoing a transformative shift, and our November FAR luncheon provided crucial insights into navigating these changes. Principal's Mark Higgins and AssuredPartners' Paul Phelan guided attendees through the complexities of SECURE 2.0 implementation, offering practical strategies for the years ahead.
Understanding SECURE 2.0
The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0, signed into law in December 2022, represents the most comprehensive retirement legislation in decades. Building on its 2019 predecessor, this sweeping legislation introduces over 90 provisions designed to address critical gaps in America's retirement system. Its core objectives focus on expanding retirement coverage, increasing savings opportunities, and simplifying plan administration.
Key objectives include:
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- Broadening access to retirement savings opportunities
- Providing enhanced flexibility in retirement planning
- Reducing administrative complexities
- Creating new options for underserved populations
- Protecting retirement savings throughout career transitions
Impact on Nonprofits and Associations
For nonprofit organizations and associations, SECURE 2.0 brings particularly significant changes. The legislation acknowledges the unique challenges faced by charitable and educational institutions through several targeted provisions:
1. Modernization of 403(b) Plans
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- Introduction of Collective Investment Trusts (CITs), aligning investment options with 401(k) plans
- Access to Insurance Separate Accounts for more flexible investment strategies
- Potential for reduced costs through expanded investment options
2. Student Loan Matching Programs
- Revolutionary approach allowing employers to match student loan payments with retirement contributions
- Flexible verification methods for loan payments
- Customizable match programs for different employee groups
- Implementation guidance focused on practical solutions
3. Long-Term Part-Time Employee Provisions
- Clarification on application to ERISA vs. non-ERISA 403(b) plans
- Maintenance of 20-hour weekly threshold
- Preservation of student worker exclusions
- Final regulations expected by January 2026
Implementation Timeline and Requirements
Immediate Focus (2024):
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- Student Loan Match (QSLP) program implementation
- Auto-Portability consideration
- DOL Lost and Found Database preparation
- Review of inadvertent benefit overpayment procedures
2025-2026 Horizon:
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- Long-term care contract distributions (December 2025)
- Paper statement elimination (2026)
- LTPT employee integration
- Emergency savings provisions
2027 and Beyond:
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- Saver's Match implementation
- Higher catch-up limits for ages 60-63
- Expanded hardship withdrawal rules
- Auto-enrollment requirements for new plans
Practical Action Items for Plan Sponsors
1. Immediate Actions:
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- Review current plan design against new requirements
- Evaluate optional provisions for potential adoption
- Begin documentation of compliance efforts
- Consider timing of Intent to Amend submissions
2. Strategic Planning:
- Develop a timeline for implementing required changes
- Assess impact on different employee groups
- Review administrative systems and processes
- Plan for communication and education initiatives
3. Long-term Considerations:
- Budget for system upgrades and administrative changes
- Prepare for increased participation rates
- Plan for enhanced reporting requirements
- Consider impact on overall benefits strategy
Looking Ahead
While implementing SECURE 2.0 presents challenges, it also offers unprecedented opportunities to strengthen retirement security for workers across all sectors. The legislation's phased approach through 2027 allows organizations to thoughtfully implement changes while maintaining focus on their core missions.
Join the FAR Community
As regulations become increasingly complex, nonprofit organizations and associations need trusted resources and expertise more than ever. FAR membership provides exclusive access to:
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- Monthly deep-dive sessions with industry experts
- Networking opportunities with peers facing similar challenges
- Regular updates on regulatory changes affecting the nonprofit sector
Click here to become a FAR member and join a community that supports nonprofits and associations in navigating the evolving retirement landscape.
