Secure 2.0 Act and Your 401(k): How to Stay Compliant and Competitive

Planning for retirement can feel daunting, especially with legislation that seems to evolve each year. The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act is a significant new chapter in that story. This legislation, which builds upon the original SECURE Act of 2019, ushers in expanded opportunities to save for retirement and offers fresh incentives for both employees and employers. For small businesses, SECURE 2.0 can provide a practical framework that makes establishing and maintaining a strong workplace retirement plan more attractive than ever.

In this article, we explain why the SECURE 2.0 Act matters for small businesses, highlight key provisions, and cover how you can put its new possibilities to work for your company. We also look at how you can plan ahead to stay compliant and proactive, and we end by showing you how Chortek can partner with you on 401(k) plan audits, plan reviews, and retirement plan consulting.

Background: Why SECURE 2.0 Matters for Small Businesses

When Congress first passed the SECURE Act in 2019, attention centered on making retirement plans more accessible to employees and introducing features like raising the beginning age for required minimum distributions. SECURE 2.0 expands these efforts and focuses on bridging common gaps that hold people back from building robust retirement savings. Individuals saddled with student debt, people who experience short-term financial hardships, and part-time workers often do not have the extra funds to put toward retirement accounts. Meanwhile, many smaller companies hesitate to take on the administrative or cost burden of offering a plan.

The SECURE 2.0 Act addresses these issues through new and enhanced incentives. It reduces hurdles such as compliance complexities and adds federal tax credits designed to encourage smaller employers to launch or upgrade their plans. These incentives can decrease up-front barriers and provide tangible advantages that strengthen employee retention and satisfaction.

Key SECURE 2.0 Provisions That Help Small Businesses

Auto-Enrollment and Automatic Escalation

A significant step within SECURE 2.0 is a requirement for new 401(k) or 403(b) plans established after January 1, 2025. Employers must automatically enroll eligible workers at a set contribution rate, then automatically boost that rate each year until it reaches at least 10%. This approach can transform how employees engage with your plan. Rather than relying on the worker to sign up, the default position becomes active retirement saving, which can lead to a dramatic jump in participation. Importantly, employees may opt out or choose a lower percentage if they wish. But many people find that inertia actually helps them stay on track and consistently build their nest egg.

Enhanced Catch-Up Contributions and “Super Catch-Up”

Catch-up contributions have long been a helpful way for people 50 and older to invest more in their retirement plans. SECURE 2.0 broadens this feature, especially for those in their early sixties. Starting in 2025, individuals 60 to 63 can make “super catch-up” contributions of at least $10,000 or potentially 150% of the standard catch-up amount, whichever is higher. That can be a vital boost for workers who want to save more aggressively as they approach retirement.

Another catch-up provision will soon require high earners (over $145,000 in wages) to make their catch-up contributions on a Roth basis, meaning those contributions go in after tax. This requirement was initially set to start earlier but has been delayed until 2026. In effect, employees who earn above the threshold still get the advantage of additional savings but do so on a tax-free growth and tax-free distribution basis, rather than receiving a tax deduction upfront.

Student Loan Match

The SECURE 2.0 Act also recognizes the considerable challenge of student debt for many workers. A new provision lets employers match student loan payments with contributions into the employee’s retirement account. In other words, if your employee makes a monthly student loan payment, you can treat it like they contributed that amount toward your retirement plan’s matching rules. Employers offering this benefit can provide younger workers an effective and valuable way to balance paying off loans while still getting an employer-funded jumpstart on retirement savings.

Although employers will need a mechanism to confirm that employees are making payments toward student debt, this can be a powerful strategy to differentiate your business in the job market. It shows a willingness to align with employees’ financial realities and positions your company as an employer who looks out for their best interests now and in the future.

Expanded Tax Credits for Small Businesses

Although offering a workplace retirement plan creates rewards for both employees and employers, the expenses tied to set-up or administration can be an obstacle. SECURE 2.0 amplifies certain tax credits that can lessen these costs for small businesses. Businesses with less than 50 employees can receive a credit of up to $5,000 for three years. These credits can help mitigate the administrative burden, and in some cases, there is an additional credit tied to your employer contributions. For businesses with just a few employees—or newer ventures with limited resources—these expanded credits could make a significant difference when deciding whether to introduce a retirement plan.

Practical Steps for SECURE 2.0 Compliance

As with any major law, the SECURE 2.0 Act doesn’t flip every switch simultaneously. Some provisions took effect in 2023, others begin in 2024 or 2025, and certain features extend or change after initial implementation periods. Business owners and administrators should map out which deadlines and provisions matter right now and which ones demand attention down the road.

The first step is to look at your existing retirement plan documents. Confirm whether they already allow for features like auto-enrollment or Roth catch-up. If you need to update them, coordinate these adjustments with your plan provider or third-party administrator. You will also want to examine whether your payroll system can handle changes such as verifying student loan payments or automatically increasing contribution percentages each year.

Equally important is communicating all these upcoming changes to your employees. A well-informed workforce is more likely to understand and take advantage of new benefits. And since many of the Act’s offerings, like student loan matching, require extra documentation or verification, it’s wise to start this educational process sooner rather than later.

Julie Schroeder is a partner at Chortek and leads the 401(k) plan audit team. “What we’re seeing right now is that businesses aren’t getting a lot of direction from plan providers,” said Julie Schroeder. “This is where the right audit partner can really make an impact. We know what to look for and what questions to ask administrators so we can provide that guidance for our clients.”

In addition to ensuring you have a strong relationship with your 401(k) audit professional, you will also want to consider involving your tax professional. They can help ensure you have a clear picture of the potential tax savings and that you’re preparing the necessary forms and documentation in a timely way.

Additional SECURE 2.0 Highlights

Beyond the marquee changes, SECURE 2.0 includes an increase in the Required Minimum Distribution (RMD) age. The starting age has moved to 73 and will eventually move to 75 in 2033. This gradual shift can give individuals extra flexibility in deciding when to begin withdrawals.

The Act also addresses emergency savings. Employers can incorporate features that let employees tap into a small amount of funds without the usual penalties, aiming to keep minor emergencies from undermining someone’s entire long-term savings plan.

Additionally, long-term part-time workers usually gain quicker access to employer-sponsored plans: as of 2025, part-timers will only need two years of service, down from three, to be offered a chance to participate.

“This is a really important change for certain industries that rely heavily on part-time/seasonal employees,” Julie points out. “And this provision has already been in effect since January 1, 2024. If you operate in one of those industries and aren’t aware of this provision, there is a good chance you are not compliant.”

Planning Tips and Considerations for Small Business Owners

While new rules or mandates can be daunting, SECURE 2.0 offers substantial opportunities for small businesses willing to integrate these provisions. A high-level cost-benefit analysis may reveal that, once you apply improved tax credits, your expenses to enhance employee benefits are offset by tangible savings or improved retention. It’s also important to help your team understand what’s available. When people see how features like auto-enrollment, catch-up contributions, or student loan matching can benefit them, they’re more likely to stay loyal to your organization.

Be sure you have robust operational and administrative support. Processes for verifying student loan payments, adjusting for Roth-only catch-up contributions, and fulfilling new auto-enrollment requirements require coordination between HR, payroll, and your plan providers. As the effective dates for these various provisions draw closer, you may choose to phase in features incrementally. This measured approach allows each change to be integrated, tested, and communicated before you move to the next.

How Chortek Helps Small Businesses with SECURE 2.0 and 401(k) Plans

At Chortek, we recognize that small businesses need practical guidance and skilled support to make the most of new legislation. Our expertise allows us to help you take advantage of the opportunities within SECURE 2.0 and keep your retirement plan compliant. Our services include:

401(k) Plan Audit Services. We focus on 401(k) plans and work efficiently to ensure your plan aligns with Department of Labor requirements and meets the highest quality standards. Our deep experience and proven four-week process allows us to keep disruptions to a minimum while thoroughly evaluating your plan’s compliance.

Plan Document Reviews. We offer plan document review services to verify that your retirement plan is structured correctly. Our specialists look at eligibility rules, optional features like auto-enrollment, and the latest SECURE 2.0 provisions, then suggest ways to keep things streamlined and effective.

Compliance and Best Practices. Navigating the ongoing changes to contribution limits, catch-up provisions, and distribution rules can be overwhelming. We stay on top of emerging regulations and guidance, so you can count on us to identify opportunities for optimization while ensuring your plan remains in compliance with the law.

Consulting and Strategic Guidance. Whether you want to implement student loan matching or reevaluate the cost-benefit of auto-escalation, our team can help you weigh the pros and cons. We’ll clarify timelines, discuss administrative requirements, and help you make decisions that fit your vision and budget.

If you’re ready to transform your company’s retirement offerings or looking for an audit partner to help you navigate the SECURE 2.0 changes, contact Chortek. We’ll collaborate with you to apply these new provisions in ways that build genuine value for your business and your employees.