The landmark retirement reform legislation referred to as the Secure 2.0 Act become law in 2022, but several key provisions have yet to take effect. Some incoming changes are likely to help clients more easily navigate the transition from work to retirement.
The expanded Setting Every Community Up for Retirement Enhancement legislation included more than individual 100 provisions focused on updating and reforming the U.S. retirement plan system. Many apply primarily to workplace retirement plans, but there are also changes affecting wealth management clients and small-business owners.
As explored in an article in the latest issue of the Journal of Financial Planning, these provisions have effective dates ranging from early 2023 through 2026 and beyond. Several will come online at the start of next year, and the five researchers hope the full package of reforms will push the needle on Americans' retirement readiness,
Authors of the article were professors Patrick Ryle and Michael D'Tiri of Dalton State College; Mark McKnight and Brett Bueltel of the University of Southern Indiana; and Christian Koch, of North Carolina State University.
"As the Secure 2.0 Act imposes numerous new obligations on employers, it also provides several key benefits that advisors and small business clients may want to take advantage of," the researchers write. "Financial planners, CPAs and other advisors must be prepared to counsel small business clients, family businesses and retirement plans on navigating the many challenges of the Secure 2.0 Act."
Retirement Account Lost and Found
Among the retirement challenges identified by the lawmakers behind the Secure 2.0 Act was the increasing mobility of today's workforce. At the same time, more workers are using individual-style accounts to save for retirement.
"As working patterns have changed and as individuals change jobs today at a much higher rate than in generations past, many accounts get lost in the transition when people change jobs," the researchers write.
For this reason, the Secure 2.0 Act directs the Labor Department to create a searchable retirement plan database to assist individuals in locating and retrieving accounts associated with former employers.
"While it is the DOL that must set up and operate the lost and found database, it is employers who must report and populate this database," the authors point out.
To this end, employers must begin to provide the DOL with key information starting Jan. 1, including the name of their retirement plan and the name and address of the plan administrator. Employers must also provide ongoing updates to the DOL when there is a change in name, address or identity of the plan administrator.
