Close this search box.

SECURE Act 2.0: Updates to Employer Sponsored Plans

On December 29th, 2022, President Biden signed the SECURE Act 2.0 into law, just six days after the legislation had passed through the United States Congress. The goal of this new bill is to incentivize more employers to offer retirement savings benefits and remove some of the barriers to retirement saving for American workers.

In February, we covered the ways SECURE Act 2.0 will impact required minimum distributions for those who have already retired (Click here to read). Today, we will cover the immediate changes for employees and businesses. It is important to note that there are changes that do not take place until 2024 and 2025. So, what do employers and employees need to know about employer sponsored plans this year?

Better Retirement Plan Start-Up Incentives

Small businesses with 50 or fewer employees can take retirement plan start-up credits to offset up to 100% of their plan start-up costs. Under the original SECURE Act, these businesses could receive a credit to offset 50% of that cost. Businesses with no retirement plan can apply for start-up credits if they join a Multiple Employer Plan (MEP). Businesses up to 100 employees will still be eligible for the 50% credit offered under the previous SECURE Act.

Interested in setting up retirement savings options for your employees? Get in touch with a HFG Trust 401(k) Specialist today – click here.

Household Employee Plans

Families can now establish Simplified Employee Pension (SEP) IRA plans for any household employee. This allows household employees, such as housekeepers, maids, babysitters, or gardeners, to have access to plans that were previously unavailable.

Relaxed Emergency Loans Requirements for Retirement Plans

Traditionally, loans from a 401(k) have been limited to 50% of the account balance or $50,000, whichever is lower. Under the SECURE Act 2.0, loans for those in a federally declared “disaster area” will be able to borrow up to 100% of their account balance or $100,000, whichever is lower. Eligible individuals will also be subject to a more generous payback window.

Extended Roth Capabilities

The SECURE Act 2.0 establishes Roth availability in SEP and Simple IRA plans. Employers will now be able to make contributions to traditional and Roth retirement accounts. Under previous regulations, employers were only allowed to make contributions to traditional accounts.

The SECURE Act 2.0 will continue to enhance opportunities for Americans saving for retirement. Some of these enhancement include the expansion of auto-enrollment in retirement savings plans for new employees, the option for employers to make contributions to an employee’s 401(k) that match their student loan payments, and, eventually, extend the age at which a retiree has to take required minimum distributions to 75.

At Community First Bank and HFG Trust, our team of experts are focused on helping you live the life you envision. If you have any questions or would like to review your plan, connect with an HFG Trust Advisor today.


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.