15:06 PM

Congress delivers holiday gift for American retirement savers: SECURE 2.0

Key takeaways:

  • Recent spikes in inflation and market volatility have made it harder for millions of Americans to achieve a secure retirement.
  • New bipartisan legislation will help by increasing access to employer sponsored retirement plans and removing barriers preventing many Americans from saving more.
  • Nationwide highlights key provisions of SECURE 2.0 likely to be most impactful.

American retirement security has been under increased pressure as market volatility and inflation have ravaged the retirement confidence of millions of Americans in the wake of the pandemic. Recent Nationwide Retirement Institute® surveys found one-in-five older Americans have delayed or canceled their retirement due to the pandemic and 1-in-10 report reducing contributions to their 401(k) to help manage expenses in today’s inflationary environment1.  

The SECURE 2.0 Act of 2022 passed by Congress on Dec. 23 as part of the FY 2023 omnibus package could make a meaningful difference in helping more Americans address this adversity and improve their retirement outlook. Leaders at Nationwide – one of the largest insurance and financial service providers in the United States – are applauding this bipartisan legislation as a significant step forward for our retirement system and powerful continuation of the momentum created by the SECURE Act of 2019.

“SECURE 2.0 provides significant enhancements that will create greater access to workplace retirement plans, which is a leading indicator of retirement preparedness and critical to retirement security,” said John Carter, President and COO of Nationwide Financial. “This legislation removes barriers that keep American workers from having access to savings plans or contributing to these benefits due to complexity and competing priorities like student loan debt repayment or the need to set aside emergency savings. Lawmakers on both sides of the aisle should be commended for coming together to help this important legislation cross the finish line at a time when it’s urgently needed.”

Nationwide was supportive of the entire package of legislation, highlighting several key provisions which are likely to deliver immediate impact:

  • An enhanced start-up and employer match tax credit that increases the tax credit allowance to 100% of employer retirement plan startup costs to be utilized in the year of credit for employers with 50 or fewer employees. This represents a 50% increase over previous state. The provision also provides a new, additional credit for small employer contributions made to a qualified plan. 
  • Improved long-time, part-time worker benefits allowing workers with two years of consecutive part-time service to participate in employer-sponsored 401(k) plans – reduced from today’s three consecutive year requisite. 
  • New student loan matching opportunities for employers that allows plans to help younger workers avoid the costly financial choice of paying against educational debt in lieu of employer-matched retirement contributions.  
  • The Enhancing Emergency and Retirement Savings Act that enables workers to tap into retirement savings for emergency expenses without penalty. This provision addresses a key reason why some workers choose not to participate in their workplace retirement plan – the fear that they won’t be able to access their money if they need it for a short-term emergency.  
  • Removal of antiquated administrative roadblocks to offer greater flexibility for 457(b) government plan participants by allowing them to adjust their deferral elections.  

“We’ve seen firsthand how the current environment is impacting participants in retirement plans we support,” said Eric Stevenson, President of Nationwide Retirement Solutions, which administers nearly 34,000 plans, protecting more than 2.6 million participants2. “Our public sector participants are exhibiting a significant increase in ‘negative behaviors’ which can threaten long-term retirement security. Specifically, contribution decreases are up 31%, contribution stops are up 17% and withdrawals due to unforeseen emergencies are up 25% year over year3. Elements of SECURE 2.0, which improve access and reduce leakage will help address these negative trends.”

SECURE 2.0 builds on the success of the SECURE Act of 2019. According to a Nationwide Retirement Institute survey4, advisors and financial professionals confirmed their clients took advantage of the SECURE Act of 2019 by updating their retirement plans (50%), saving more in general (48%), increasing their retirement account contributions (48%) and increasing their emergency savings (47%). A key provision of the SECURE Act of 2019 also helped drive greater access to guaranteed retirement income within employer-sponsored plans. This opened the door for Nationwide to introduce a full suite of in-plan guarantee investment solutions that provide guaranteed retirement income and protection from market volatility.



1 Nationwide Retirement Institute Inflation Flash Poll, Feb. 2022
2 As of Dec. 2021
3 Nationwide Retirement Solutions participant data, May 2021-May 2022
4 Nationwide Retirement Institute survey of advisors and financial professionals, Feb. 2021

Federal income tax laws are complex and subject to change. The information presented here is based on current interpretations of the law and is not guaranteed.

Nationwide and its representatives do not give legal or tax advice. An attorney or tax advisor should be consulted for answers to specific questions.

Guarantees are subject to the claims-paying ability of the issuing insurance company.

Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, Ohio. The Nationwide Retirement Institute is a division of NISC.