What Will It Take to Get Employees to Save for Retirement? SECURE 2.0 Act Allows Nontaxable Incentives to Kick-Start Employee Savings

Incentives are good motivators. The SECURE 2.0 Act (Pub. L. No. 117-328, Div. T), allows employers to offer de minimis financial incentives to employees to participate in their 401(k) or 403(b) plans. IRS just issued Notice 2024-2 providing guidance on a host of SECURE 2.0 Act provisions, including financial incentive-guidance. A financial incentive under $250 will be considered de minimis and can be offered to employees who do not currently have a deferral election in place. Notice 2024-2, Q&A, D-1 through D-6.

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• SECURE 2.0 Act Implementation Timeline for Retirement Plan Sponsors
  Review implementation dates for the SECURE 2.0 Act by referencing this timeline for changes that are required or permitted under the law. One change to consider is allowing emergency savings accounts, as permitted under Section 127 of the SECURE 2.0 Act. This is a side account in a participant’s 401(k) plan account. Contributions to the emergency account may only be made by non-highly compensated employees, must be made on a Roth basis, can total up to $2,500, and withdrawals are permitted, penalty-free.

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