Adoption of Optional SECURE 2.0 Provisions Still Slow Going Into 2025

As 2025 begins, employers appear to be carefully incorporating some of the optional provisions made available by the SECURE 2.0 Act of 2022 and simultaneously shying away from other benefits that were anticipated to gain more traction.

According to Alight’s “2025 Hot Topics in Retirement and Financial  ,” based on data from a survey of 122 employers in September 2024, plan sponsors have shown interest in adding features like hardship self-certification, but less interest in emergency sidecar savings.

Currently, about 30% of employers have incorporated hardship self-certification, and 15% of employers said they have definite plans to add this feature. Of those who said they will definitely or likely add the feature, more than half said they plan to add it in 2025. Hardship self-certification allows plan sponsors to rely on employees’ written self-certification that their hardship withdrawals fulfill one of the approved safe harbor hardship reasons and that the distribution does not exceed the amount required to satisfy the financial need.

The option for employees to take out up to $10,000 due to domestic abuse demonstrated particular interest: 15% of employers said they will definitely add this option, and 19% said they are likely to add it.

Many employers have also increased the individual retirement account force-out limit for vested balances up to $7,000, with 14% saying they are definitely adding this feature in 2025. Significantly fewer employers said they will be adding an employer match to Roth contributions and nonelective employer contributions to Roth.

Limited Pickup for Several 2025 Provisions

The optional provision to include a $2,500 emergency savings sidecar account has gained minimal traction, with merely 1% of employers adopting it so far. No employers reported to Alight that they are committed to adding it in 2025, and 33% said they are definitely not adding it.

Rob Austin, head of thought leadership at Alight Solutions, says one of the biggest barriers to adoption is the administrative hurdle faced when participant accounts near the $2,500 threshold. The savings account contributions are made on a Roth basis, and the sidecar account is capped at $2,500, which means additional contributions must go to a different account—most likely the before-tax 401(k) plan, Austin said via email. As a result, payroll departments often need time to change between Roth and before-tax contributions.

Some employers have expressed disinterest in connecting an emergency savings account to the retirement plan, fearing that employees will treat their 401(k) accounts as sources for short-term liquidity needs, rather than as long-term savings vehicles.

However, employers in Alight’s survey expressed some interest in adding the annual $1,000 emergency withdrawal option to their plans, with 12% saying they will definitely add this feature at some point.

Another optional provision struggling for employer take-up is the option to make matching contributions for student loan repayments. Almost 75% of workers say they want help from their employer to reduce their student loan debt or refinance at lower rates, Alight found. But only a handful of employers are offering tools to help, and only 5% of employers are currently offering the student loan 401(k) matching benefit authorized by SECURE 2.0.

With more recordkeepers developing the infrastructure to offer student loan matching, Alight’s report predicted that the prevalence of this benefit will increase in 2025.

Lastly, the recordkeeper found very low interest in pooled employer plans, as 93% of employers said they are not at all interested, and none said they were very interested in joining one in 2025. According to Austin, one possible explanation is that many large employers feel they already receive institutional pricing on funds, a primary benefit of a PEP.

More Sharing to Come

In planning for longer-term changes, legal uncertainty and a lack of clarity from the Department of Labor and IRS are causing some hesitation from plan sponsors, according to the survey results. Nearly half of employers said they need more legal clarity before adding the Saver’s Match contribution, which aims to help low- and moderate-income workers save for retirement by providing a nonrefundable tax credit. Only 1% of employers said they will definitely add the Saver’s Match feature, which does not take effect until 2027.

Austin says the Saver’s Match will require a new level of sharing between plans and the federal government. For example, the government will need to know who participates in each plan and will also need a mechanism to securely deposit funds into participants’ accounts.

“Several nuances and details are yet to be ironed out, such as how the Saver’s Match will work for married couples,” he says. “We are hopeful that the infrastructure and clarity is established before the Saver’s Match is effective in 2027.”