While many of the major provisions of SECURE 2.0 are already in effect, plan sponsors still have work to do as they operationalize the changes. This summer is a good opportunity to review how the legislation affects different segments of the workforce before small administrative issues become larger compliance concerns.
Here are three employee groups that deserve a closer look.
1. Higher Earners Age 50+
Employees who are eligible to make catch-up contributions and whose prior-year wages exceed the applicable IRS threshold may now be subject to Roth catch-up requirements.
For sponsors, this means payroll systems, recordkeepers, and plan administration processes should all be aligned to properly identify affected employees and process contributions correctly. Reviewing these procedures now can help avoid confusion during open enrollment and year-end contribution periods.
2. Employees Ages 60–63
SECURE 2.0 introduced higher catch-up contribution limits for participants ages 60 through 63, giving employees approaching retirement an additional opportunity to increase their savings.
Sponsors may want to consider whether participants are aware of this enhanced limit and whether payroll systems are prepared to accommodate the higher contribution amounts. Even employees who have consistently maxed out traditional catch-up contributions may not realize they can save more during these years.
3. Long-Term Part-Time Employees
The legislation also expanded retirement plan access for many long-term part-time employees. Under current rules, employees who work at least 500 hours in two consecutive years may become eligible to make elective deferrals, depending on the plan’s design.
As a result, accurately tracking employee hours has become even more important. Sponsors should verify that their eligibility monitoring processes are working as intended so newly eligible employees aren’t overlooked.
A Good Time for a Mid-Year Review
Every retirement plan is different, and not every SECURE 2.0 provision applies in the same way. However, these three employee groups represent areas where sponsors can proactively review plan administration, payroll processes, and participant communications before operational issues arise.
Taking time for a mid-year checkup can help ensure the plan remains compliant while giving participants the opportunity to make the most of the retirement benefits available to them.
