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Prepare for Retirement Plan Enhancements: SECURE 2.0 Act Updates Take Effect January 2025

By Doug DeBoer, CPA

December 5, 2024

Starting January 1, 2025, key components of the SECURE 2.0 Act—specifically Provisions 101 and 109— will come into effect, potentially impacting your retirement plan. If you haven’t adjusted for these changes, read on to understand the modifications and how to comply with new requirements.

Provision 101 – Automatic Enrollment and Contribution Increases

Plan Impact: For 401(k) plans initiated on or after December 29, 2022, it’s now mandatory to incorporate automatic enrollment and automatic contribution increase features, with some exceptions.

Recommended Actions

If your 401(k) plan was initiated after December 29, 2022, you may need to implement automatic enrollment and escalation by January 1. Consult with your Third-Party Administrator (TPA) for detailed guidance.

Provision 109 – Expanded Catch-Up Contributions

Plan Impact: Plans that offer catch-up contributions for employees aged 50 and above may now allow “super catch-up contributions” for those turning 60, 61, 62, or 63 within the year. The IRS has announced a 2025 super catch-up contribution limit of $11,250.

Recommended Actions

If your plan includes catch-up contributions, coordinate with your payroll provider to ensure they can accommodate the increased limits. Also, work with your TPA to update the plan document and other related systems accordingly. By addressing these changes, you can ensure your retirement plan aligns with the new legislative requirements and continues to support your employees’ retirement savings goals.

Get in Touch

An employee benefit plan audit is vital in maintaining compliance and preventing potential issues. At Grimbleby Coleman, we have an Audit & Assurance team with extensive expertise in auditing employee benefit plans, and our team of dedicated professionals knows how to navigate between client contacts and outsourced service providers to facilitate an efficient and value-added audit.

We are committed to helping companies navigate the updates to the SECURE ACT 2.0. Contact our team today to discuss your audit needs.