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Navigating SECURE 2.0: What’s new for ERISA plan sponsors in 2025

1/9/25

By: Thomas R. Starks

The SECURE 2.0 Act, which amends ERISA and parts of the Internal Revenue Code, includes several provisions that will take effect in 2025. To ensure compliance, 401(k) plan sponsors must ensure that these provisions are implemented. Key changes beginning in 2025 include: 

1. Establishment of a Retirement Savings Lost and Found Database 

The Department of Labor recently launched an online “lost and found” database to help individuals locate misplaced retirement accounts. Plan sponsors will need to provide information to the DOL for the database, which will enable participants to look up forgotten retirement savings. 

2. Mandatory Automatic Enrollment for New Plans 

All new 401(k) and 403(b) plans established after December 29, 2022 must automatically enroll eligible employees starting in 2025. The initial contribution rate must be at least 3% of the employee’s pay, with the rate escalating annually by 1% until it reaches at least 10%, but not more than 15%. Employees retain the option to opt-out or select a different contribution rate. Merged plans, Multiple Employer Plans, and Pooled Employer Plans have nuances that applicable plan sponsors should keep in mind. 

3. Increased Catch-Up Contributions for Ages 60 to 63 

Employees aged 60 through 63 can make catch-up contributions to their retirement plans at the greater of $10,000 or 50% more than the regular catch-up amount for 2024. This adjustment allows individuals nearing retirement to significantly boost their savings during these critical years. 

4. Expanded Eligibility for Long-Term, Part-Time Employees 

Long-term, part-time employees who have completed at least 500 hours of service per year for two consecutive years must be allowed to participate in their employer’s retirement plan. This change reduces the previous three-year requirement, which increases the access to retirement benefits for part-time workers. 

5. Increased Contribution Limits 

The IRS announced that for 2025, the annual contribution limit for 401(k), 403(b), and most 457 plans will increase to $23,500, up from $23,000 in 2024. Plan sponsors should update payroll systems and educate employees on these changes to take full advantage of the increased limit. 

By proactively addressing these changes, defined contribution plan sponsors can enhance retirement readiness for their workforce and maintain compliance with evolving legislative requirements. 

For more information on the topic, contact Thomas R. Starks at thomas.starks@fmglaw.com or your local FMG relationship partner.