Room for Improvement: How Plan Sponsors Can Strengthen Their Plans Ahead of SECURE 2.0
The retirement readiness of American workers continues to be of concern across industries, in Washington, and around dinner tables. In the face of higher inflation and the likelihood of a coming recession, many are looking to Congress for relief.
In March of 2022, the U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 (“SECURE 2.0”). The goal of SECURE 2.0, which builds on the reforms of 2019’s SECURE Act, is to further enhance the private retirement system by increasing coverage, making it easier for individuals to preserve savings, and simplifying plan administration. Since the passage of the SECURE 2.0 bill, two key committees in the Senate have also released similar bipartisan legislation.
Committees (two in the House and two in the Senate) are currently meeting to reconcile the three bills into a single piece of legislation, and there still is a chance a comprehensive SECURE 2.0 bill could be enacted by the end of 2022 or early 2023. While Congress works on legislation to improve retirement readiness, you may want to talk to your advisors about strengthening some areas of your current plan regardless of whether or when new legislation may take effect.
Room for improvement
- Cybersecurity. Plan sponsors have become major targets for cyberattacks in recent years, but often don’t have the same level of cybersecurity as plan providers. Recently, the SPARK Institute revisited this urgent topic and released a new guide to cybersecurity, the SPARK Data Security Best Practices: Seventeen Control Objectives to help you improve your plan’s security.
- Emergency savings plans. If the past couple of years have taught us anything, it’s the importance of preparing financially for the unexpected. An emergency savings fund can create or enhance an essential safety net, and more recordkeepers are looking to add them as a plan element given how cost-effective they are to implement. An emergency savings fund is also among the most desired benefits by workers according to a recent SHRM and Morgan Stanley survey.
- Participant search services. As job layoffs pick up steam and balances in the retirement accounts of unresponsive participants increase, plan risk and administrative burden rises. Third-party search services, like those offered by Millennium Trust, can help you manage the risk unresponsive participants present. Using a multi-step search process to find inconsistencies in participant addresses, inaccuracies within participant data, and updates to life status, we often generate a report of the most current participant data available within several days. Search services can also be useful in locating individuals who are subject to Required Minimum Distributions (RMD) and need to take distributions.
While we’ll continue to monitor the progress of a comprehensive SECURE 2.0 bill and share updates, you can learn more about how we can help you and your advisors strengthen the effectiveness of your plan by visiting our Retirement Services webpage.
The material in this article is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Millennium Trust Company performs the duties of a directed custodian, and as such does not offer or sell investments or provide investment, legal, or tax advice.