SECURE 2.0 surprises for plan sponsors and TPAs: Accelerated long-term, part-timer savings plan eligibility

Our latest Client Action Bulletin reviews the H.R. 2954, which was approved by in a landslide bipartisan vote on March 29. This bill of proposed changes to U.S. tax-qualified retirement plans, which builds on the Setting Every Community Up for Retirement Security (SECURE) Act of 2019, is commonly known as SECURE 2.0, and is headed to the Senate “soon” for markup and consolidation. Section 116 of the bill accelerates to two years (from three years) the number of years a plan sponsor must track long-term, part-time employees for eligibility to start paycheck deferrals to the employer savings plan.

If this bill becomes pension law (and early handicapping suggests it could be enacted in 2022) plan sponsors and governance boards will need to assess the impact of this mandatory eligibility change for their retirement programs as they emerge from the complexities of two years of pandemic-related disruption in business operations and workforce management.