PLANSPONSOR - May - June 2023 - 10

Waiting for the SECURE Act 3.0
UPFRONT
For example, presuming the error to
the act gets fixed, SECURE 2.0 expands
catch-up contributions for employees age
60 through 63, which would help only
those who have already maxed out their
contributions for the year, a group typically
at the top of their earning capacity.
The legislation also increases the
required minimum distribution age to
73 this year and to 75 by 2033. Putting
off RMDs allows participants to grow
their account further; this favors wealthy
employees who can afford to wait longer
before beginning to take distributions
from their retirement accounts, says J.
Mark Iwry, nonresident senior fellow at
The Brookings Institution.
SECURE 2.0 expands plan access
to lower earners in some ways, such
as requiring that part-timers with two
years of service be permitted to join
an employer 401(k) or 403(b) plan, and
enhancing the retirement savings contribution
credit, better known as the saver's
credit, says Siavash Radpour, associate
research director of the Retirement
Equity Lab at The New School's Schwartz
Center for Economic Policy Analysis.
However, he says, these reforms are tiny
compared with the ones that assist high
earners, and the saver's credit enhancement
does not take effect until 2027.
As another means to help, the law
S
everal months after the passage of the
SECURE [Setting Every Community
Up for Retirement Enhancement] 2.0 Act
of 2022, some observers are looking at the
law and considering what it left out. Some
items have been widely covered, such as
the failure to include a provision permitting
collective investment trusts in 403(b)
plans. Some technical errors, such as accidentally
banning catch-up contributions
as of 2024, which is still yet to be fixed,
have also been widely noted.
But observers say there are some
other major omissions from SECURE 2.0
that have flown under the radar.
One of the more underexamined criticisms
of the act is that it disproportionately
helps high earners and those who
already have retirement savings, while
offering much less to aid lower earners.
Alicia Munnell, director of the Center for
Retirement Research at Boston College and
a professor of management sciences at the
college's Carroll School of Management,
for one, says SECURE 2.0 has " lots of
goodies for high-income people. " The act
does substantially more for them, while
neglecting lower earners, she says.
10 PLANSPONSOR.COM May - June 2023 Art by Andrea D'Aquino
creates two new plan designs aimed at
employers yet to offer a retirement plan.
One is a deferral-only 401(k) plan, and
the other is a safe harbor 403(b) plan.
Both would require that all employees
be enrolled. The provision is effective
for plan years beginning after this
December 31. Deferral limits for these
plans match the individual retirement
account contribution limits.
SECURE 2.0 also allows employers
to offer " de minimis " incentives to
employees to join a plan, such as by
giving them gift cards, says Radpour. He
says he worries, however, that, because
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