401(k) Specialist Issue 1 - 2023 - 4

401(k) NEWS YOU CAN USE
The Long-Term Impacts of SECURE 2.0
AMONG THE GOOD that comes with SECURE 2.0's passing is its projected
long-term impacts on retirement for millions of Americans.
One provision, the starter 401(k), simplifies the path for small business
employers wanting to offer a workplace retirement plan with zero out-ofpocket
costs. With this provision, small businesses without a workplace
plan can offer a starter 401(k) plan or a safe harbor 403(b) plan and automatically
enroll eligible employees at 3%. Employers are not required
to offer contributions, and the plan would not mandate year-end testing,
thus reducing cost and stress on the employer side.
" The starter 401(k) doesn't just add a cost-effective option, they can
put a plan in place, offer a contribution, hire a financial advisor, and
essentially do it at zero out-of-pocket costs with the new tax credits, " said
Joe DeBello, vice president of retirement at OneDigital.
The new legislation also expands the original SECURE Act to now allow
403(b) plans to participate in MEPs and PEPs and provides relief from
the " one-bad-apple " rule. The aim is to eventually even 403(b) plans with
401(k)s and offer more retirement savings options to the former.
There's also no denying that provisions in SECURE 2.0 are likely to
assist underserved populations that have historically been denied
adequate savings options. The part-time eligibility provision in SECURE
2.0 offers accessibility to a workplace plan and gives long-term workers a
vehicle to effectively save for the future. " When you have a system today
that essentially allows employers to keep long-term, part-time employees,
this unfairly penalizes females in our country, which only widens
the wealth gap, " said DeBello. " By allowing this long-term, part-time
provision, it's going to help level the playing field. "
Americans Remain Confident in Retirement
Savings, Despite Market Uncertainty
It wasn't all good news, however. Respondents reported a 10-point
decrease in their neutrality of sufficient income for retirement, and
pessimism sentiments reported an eight-point increase in 2022. Even for
those who don't anticipate retiring in the future, 6% said they were eager
to work while 10% said retiring was not financially feasible for them.
Despite the retirement insecurity among several, the research saw
DESPITE AN uncertain market environment, staggering day-to-day
costs, and an ambiguous job market, Americans remain in good spirits
when it comes to their retirement.
New research from State Street Global Advisors finds 84% of over 3,500
respondents anticipate some form of retirement-whether that's fully
retiring (59%) or a future of partial work (25%). The research showed a
slight uptick in optimism regarding financial preparedness aimed for
retirement, with a rebound of two points in 2022 to 29%, surpassing the
pandemic decline and topping 2018 numbers.
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ISSUE 1 2023 | 401kSpecialist.com
a surge in retirement savings contributions and a decrease in those reducing
or terminating savings. SSGA connects this increase in savings to
curtailed spending during the COVID-19 pandemic, government stimulus
checks, and an emergency savings-oriented mindset among workers
during the crisis.
Respondents also believe their employer-sponsored retirement savings
plan will be their prime vehicle (73%) in retirement income, followed
by Social Security (53%), and personal savings (32%). Others believe
part-time work (14%) will be their main source of retirement income,
suggesting many may be considering it as a backup option in retirement.
As a result, SSGA projects a greater focus on spending and
saving for retirement in 2023, considering the growing attention
to retirement contributions and portfolio risk management.
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Photo by Tom Fisk
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401(k) Specialist Issue 1 - 2023

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