Bloomberg Law
Dec. 12, 2022, 10:00 AM

Your 401(k) Plan Re-imagined, Again: SECURE Act 2.0 Explained

Austin R. Ramsey
Austin R. Ramsey

Bipartisan measures lawmakers are pushing to get over the finish line before the start of the new congressional calendar next year could add $83.6 billion to the retirement savings marketplace and create an entirely new class of workplace savers.

If passed, the slate of bills dubbed SECURE Act 2.0 would have real-world effects on new worker access to employer-sponsored retirement plans, reshaping the kinds of investments employees have in those plans and how savers could preserve their savings to last well into retirement.

Provisions in three different versions of the legislative package promise to make it easier for small companies to set up plans and reduce the cost and administrative burdens associated with sponsoring them.

Congress is negotiating for passage before the end-of-year deadline when a new slate of decision-makers are set to take office and the process for passing bipartisan bills would restart and get a lot harder. Business and consumer-rights advocates are optimistic, however, that the package would make its way into a last-minute spending bill for adoption before the holidays.

1. What is SECURE Act 2.0, and why is it 2.0?

Congress does seem to enjoy unique naming conventions. SECURE Act 2.0 borrows its name from a similar retirement savings initiative former President Donald Trump signed into law in 2019—the Setting Every Community Up for Retirement Enhancement Act (Pub.L. 116-94).

The first SECURE Act focused mostly on two things: increasing the minimum age when retirement savers must start drawing down on their accounts, and coming up with new, creative ways for retirement plans to pool their resources to reduce the overall cost of setting up and maintaining a workplace plan.

SECURE Act 2.0 is designed to go a step further. It would raise the required minimum distribution age again (this time to age 75), and it would allow more plans than a standard 401(k) to access pooled investment features. But the bills would also add new components to most private-sector workplace plans intended to hedge against consumer finance woes workers faced during the Covid-19 pandemic and encourage more workers to set up plans.

2. What’s different in the new SECURE Act iteration?

Some high-profile proposals that make up SECURE Act 2.0 would automatically enroll new workers into a plan. A newly hired employee would have to actively choose not to save for retirement in order to prevent a portion of their paycheck from being automatically invested.

Employers might be able to design new plans that incorporate emergency savings features and even allow student loan repayments to be treated as retirement savings contributions when determining whether and how much a company should co-contribute. Plans would find it easier to incorporate in-plan insurance contracts that savers can invest in to ensure they don’t run out of money during retirement.

The bills also would increase the tax-advantaged catch-up contributions older workers can make to their accounts in preparation for retirement age and expand retirement savings access to part-time workers that stick it out with the same company for several years.

3. Why are we talking about retirement access?

Lawmakers are concerned that not enough Americans are preparing for their retirement, and there’s some real merit to those concerns. Nearly half of working-age Americans—57 million people—don’t have access to an employer-sponsored retirement savings plan, according to new AARP research. Workplace plans are by far the easiest, cheapest way to save for retirement, and many Americans who can’t save at work aren’t saving at all.

Those workers who do save aren’t saving enough, according to the Federal Reserve’s Survey of Consumer Finances. The median retirement account in 2019 was $65,000, and older Americans hadn’t saved much more, averaging $134,000. In total, only about half of workers were saving enough to last them their lifetime, meaning only a fraction of the workforce will make it through retirement without help.

And that help comes in the form of costly social safety nets that threaten to overburden state and federal governments in the future. That’s why lawmakers say they’re trying to address the retirement savings gap now.

4. What’s the hold up?

For starters, SECURE Act 2.0 isn’t actually one bill yet—it’s three. And there’s plenty of overlap and disagreement among those three different proposals in the House and Senate. The automatic enrollment provision is only in the House version of the bill that already passed with a resounding 414-5 vote in March.

The two Senate versions of the bill that have only made it out of committee don’t have exact versions of that provision, and there’s at least some concern from employers groups that it’s a bit too close to an employer savings mandate. That’s got Senate Republicans on edge in a narrowly divided chamber. What’s more, the expansion of a worker retirement savings tax credit has some lawmakers concerned about the cost of the total access package.

Republicans and Democrats in both chambers have said they’re trying to find a way to combine all three versions of the bill into a single package before the end of the legislative calendar, but time is running out, and there’s no guarantee the new Congress will make retirement legislation a priority.

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To contact the reporter on this story: Austin R. Ramsey in Washington at

To contact the editor responsible for this story: Martha Mueller Neff at; Rebekah Mintzer at