The Treasury Department, in an effort to bolster financial inclusion, recommends policymakers and employers implement and adopt key pieces of SECURE 2.0, like the bill’s saver’s match and emergency savings programs.
Improving “equitable access to tax-advantaged retirement accounts” and supporting underserved households in saving for retirement is one of the main recommendations made in Treasury’s report titled, “National Strategy for Financial Inclusion in the United States.”
Specifically, Treasury said the saver’s match and emergency savings provisions in SECURE 2.0, a retirement security package Congress passed in 2022, are important programs to help Americans and encouraged stakeholders to take them up.
Starting in 2027, the saver’s match program will allow qualified Americans participating in an employer-sponsored retirement plan or contributing to an individual retirement account to receive a 50% federal matching contribution up to a maximum of $1,000 if filing individually. The matching contributions will be deposited directly into the taxpayer’s retirement plan account or IRA.
“Alongside policymakers, plan sponsors, employers and other stakeholders should take advantage of opportunities in the SECURE 2.0 Act to promote retirement security, including acceptance of saver’s match contributions, for their plan members and employees, to promote retirement security for all participants and employees,” Treasury said in its report.
Treasury in September issued a notice seeking public feedback on a host of saver’s match program topics, like eligibility, how such contributions would be claimed, the process for completing saver’s match contributions, and reporting and disclosing for the contributions. Comments are due by Nov. 4.
Separately, SECURE 2.0 allows employers to create emergency savings accounts within their retirement plan. Participants can be automatically enrolled at up to 3% of their pay, and they can opt out. After-tax contributions are capped at $2,500.
Treasury said employers should “facilitate access to emergency savings accounts that can help employees build financial resilience and protect future retirement income.” Moreover, it added that employers should consider "other ways to support employees’ needs for emergency savings, such as explicitly authorizing the limited penalty-free distributions for emergency personal or family expenses provided for in the SECURE 2.0 Act.”
The report also touted SECURE 2.0’s automatic enrollment provision and endorsed the adoption of state-backed auto IRA programs.
Lastly, Treasury backed the Department of Labor’s fiduciary investment advice rule that, among other things, changed the five-part test that determines when someone is an investment advice fiduciary under ERISA so that one-time advice, such as rollovers to IRAs or annuity purchases, must be in an investor’s best interest. That rule is facing lawsuits and two district court judges have halted the rule's implementation.
