Financial advisor’s quick guide to SECURE Act 2.0

11 MIN READEditorial Policy

With the signing of the Setting Every Community Up for Retirement (SECURE) Act 2.0 in 2022, retirement became more of a possibility for many working Americans. The 90+ provisions of this new law allow some to contribute to a retirement savings plan for the very first time, while also changing the playing field for those who are already investing, thanks to catch-up and contribution limit increases and other extensions.

All of this new opportunity bleeds into the field of financial advisors who oversee the finances of many of these individuals. The SECURE Act 2.0 may create extraordinary opportunities for financial advisors to grow their businesses.

Understanding SECURE Act 2.0 can help financial advisors provide their clients with the guidance they need to make the most informed and effective decisions for their retirement while building their AUM.

Why should financial advisors track retirement legislation?

As a financial advisor, there’s a responsibility to help clients stay on track to meet their short- and long-term financial goals. Tracking changes in retirement legislation is a large part of the role of a financial advisor, as they often have a significant impact on the saving strategies they provide to their clients.

SECURE Act 2.0 changes that may impact your clients

The SECURE Act 2.0 contains more than 90 new provisions and a large number of them will impact your clients. 

Expanded SECURE Act small business tax incentives

One of the most significant changes your clients will see in the wake of SECURE Act 2.0 is the increase in financial support for qualified small businesses, who will have access to:

  • Doubled tax credits for new plans resulting in up to $15,000 total. Businesses with 50 employees or less can claim 100% of their plan start-up costs (up from 50%) up to $5,000 per year for the first three years.

  •  Tax credits for utilizing auto-enroll. Businesses can collect up to $500 annually for the first three years of opting for auto-enroll in their plan. Under SECURE 2.0, auto-enroll will become mandatory in new plans started after December 29, 2022, beginning with the 2025 plan year.

  • Enhanced employer match credits. Businesses with less than 100 employees and who make an employer contribution are able to claim a tax credit of up to $1,000 per year per participant earning $100,000 or less in compensation for up to three years.

Small businesses also may be available for tax credits for the first time with this law’s expanded eligibility for start-up tax credits. If your client is part of an existing multiple employer plan, they may now be eligible for start-up tax credits depending on what year they joined.

Increased access for part-time workers

SECURE ACT 2.0 expands retirement plan eligibility for part-time workers in America. Prior to SECURE, employees were required to work at least 1,000 hours a year to become eligible for a business’s plan. SECURE added a new part-time employee eligibility rule that only requires 500 hours of service per year for three consecutive years. Under SECURE 2.0, part-time employees now only have to work 500 hours per year for two consecutive years to become eligible to participate in their employer’s retirement plan. 

Increased savings flexibility for those 60 and over

SECURE 2.0 made a big play for seasoned savers by increasing the catch-up contribution limit for some ages and increasing the age for required minimum distributions (RMD). 

  • Expanded contribution ages: For the 2025 plan year, participants aged 60, 61, 62, and 63 will be able to make catch-up contributions of $10,000 (or 150% of the 2024 annual limit if that is greater).

  • IRA catch-up contributions indexed to inflation: The IRA catch-up contribution limit for contributing individuals 50 years and older will be adjusted annually based on inflation.

  • Increased mandatory RMD: Individuals will not be required to take a required minimum distribution (RMD) until 73 years of age, up from 72 before the signing of SECURE 2.0. In 2033, the age will rise again to 75 years old.

These adjustments will dramatically increase the market for financial advisors as those nearing retirement scramble to take advantage of these catch-up catalysts.

Reduced penalties for withdrawing money due to emergency

The new law will make emergency withdrawals easier in some cases. Starting in 2024, the 10% penalty that has previously been charged for all withdrawals taken before retirement age will be waived for distributions to participants who are affected by major disasters, have experienced domestic abuse, have personal emergency expenses, have a terminal illness or owe premiums on certified long-term care insurance. These are optional plan distributions; not all plans will offer all options.

Benefits of 401(k) planning for financial advisors

Becoming an expert on the SECURE Act 2.0 and its many new opportunities and requirements could provide significant benefits to a financial advisor’s business.

Increased client loyalty

Financial advisors are in an optimal position to educate small businesses on the SECURE Act 2.0 provisions because they’re already well informed on the unique needs of each client, and can provide specific guidance based on the new law. Increased education increases confidence, and people tend to gravitate toward sources of confidence.

Plus, having extensive knowledge of the many provisions that impact those saving for retirement can set a financial advisor apart from others. Taking the time to familiarize yourself with the SECURE Act 2.0 could lead to new business and keep existing clients in your orbit. The ability to maintain a good long-term relationship with clients can also open the door to new business.

Revenue growth

SECURE 2.0 makes it easier for employers to provide a retirement plan to their employees with added tax incentives and required plan features like auto-enrollment and auto-escalation starting in 2025.

Those plan design features can also work to benefit the retirement plan advisor. Like its name implies, auto-enrollment will automatically enroll eligible employees into the plan which has proven to increase participation. In fact, a study by Vanguard found that participation rates more than tripled when auto-enroll was enabled, compared to the voluntary enrollment participation rate of 28%.

While auto-enrollment increases participation rates, auto-escalation automatically increases how much those participants are contributing annually. More participants contributing more money means more AUM for financial advisors.

Increased regulatory compliance

Every qualified retirement plan in the United States is subject to regulatory rules created by the Internal Revenue Service and the Department of Labor. With the influx of new plans that are expected to be established with the signing of SECURE 2.0, there will be a lot of questions for financial advisors surrounding staying compliant.

The SECURE Act 2.0 has beefed up compliance regulations to encourage plan sponsors to stay on top of their plans and reduce risk for disqualification as much as possible. Some of the most notable compliance changes are:

  • Standard, annual notices to increase participant understanding.

  • Increased penalties for failing to properly file Form 5500 with the Department of Labor.

  • Increased access to lifetime income options (like annuities) and the disclosure of their associated fees and risks that apply to those taking advantage of them.

Financial advisors can help retirement plan clients fulfill their fiduciary responsibilities.

Human Interest can provide fiduciary services

At Human Interest, we work with financial advisors to provide the fiduciary services they need to act in the best interest of their clients. We provide 3(16) administrative, 3(21) co-fiduciary investment advisory, and 3(38) investment management services

These services come from the Employee Retirement Income Security Act (ERSA), which was established in 1974 to set minimum standards for retirement and welfare benefit plans. The 3(16) Fiduciary Services Provider is there to ensure a retirement plan is being managed in compliance with ERISA requirements. As a 3(16) Fiduciary Services Provider, Human Interest can:

  • Reduce an employer’s fiduciary liability by managing the majority of a plan sponsor’s administrative responsibilities.

  • Reduce an employer’s risk of penalties and plan disqualification by handling compliance-related items (i.e. signing and filing Form 5500).

  • Reduce the day-to-day administrative work associated with running a plan, such as contribution rate monitoring, census review, and termination distribution processing.

The latter two services are similar in that the fiduciary can provide guidance regarding a plan’s investment lineup. A 3(38) investment manager can make decisions about the plan’s investment lineup directly while 3(21) investment advisors only make recommendations that must be approved by the plan sponsor. 

Which service is a better fit largely depends on the level of trust you have for your fiduciary and how involved you want to be in the inner workings of your investments. When fiduciary services are covered, financial advisors have the ability to focus on stacking the building blocks of their client’s financial futures.

Learn more about how Human Interest can support and drive value for financial advisors here.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.



An investment advisory fee is paid to Human Interest Advisors (HIA) of 0.01% of plan assets and a separate fee for recordkeeping services and custody-related expenses is paid to Human Interest Inc. (HII) of 0.05% of plan assets. Both fees are deducted on a monthly basis from the employee's account according to the HII and HIA Terms of Service. All prices are exclusive of applicable taxes. If the plan sponsor elects to hire an external investment advisor, the plan sponsor will pay such advisor as agreed between the plan sponsor and advisor. For more information, please see our pricing page.