Amidst the shuffle of the holidays, Congress passed and President Biden signed a bill that implements several federal reforms to retirement benefits offered by employers to their employees. The new law, the SECURE Act 2.0, took effect January 1 and phases in new requirements in the coming years.
The law’s enactment means not only required changes to motor carriers’ and private fleets’ HR and benefits programs — but it also offers an opportunity for fleets to promote their retirement plans to both their existing personnel as a retention strategy and to prospective recruits, too.
Congress’ primary reason for overhauling how employers administer retirement plans is to encourage employee participation by adding a bundle of new incentives and tax breaks for doing so, as well as allowing more flexible options for utilizing retirement savings during retirement-aged years.
For fleets, chief among the new law’s changes is a requirement that employers automatically enroll their new hires in employee-sponsored retirement plans like 401(k)s and IRAs — transitioning retirement plans to opt-out benefits rather than opt-in.
Here are a few notes about the law, how it might impact fleets, and how the Secure 2.0 Act’s passage can be a marketing win for companies who hire and retain professional drivers and technicians.
Automatic enrollment for employees
The SECURE 2.0 Act requires employers to enroll new hires into employer-sponsored retirement plans starting Jan. 1, 2025, by automatically contributing 3% of an employee’s earnings into the company’s provided retirement plan. Then, every year after, employers are required to boost those employee’s contributions by 1% a year until the contributions reach 15%.
The SECURE Act doesn’t require employers to match those contributions — just to automatically enroll new employees at those contribution rates.
However, employees can opt out of participation when they are hired or opt out of the automatically contribution increases. By making retirement accounts opt-out instead of opt-in benefits, lawmakers hope more workers will participate in employers’ plans.
A new window for fleets to market retirement benefits
Motor carriers and private fleets regularly report that retirement programs are the least-utilized benefit of their compensation programs. However, according to 2022 study by AARP, nearly 50% of workers in the U.S. don’t have access to a retirement plan at all through their employer, meaning that carriers and private fleets excel in this area — which opens a fantastic window for fleets to market and promote the robust retirement benefits they provide to employees.
As a retention tool, use the SECURE Act’s passage as a prompt to remind your current personnel about your retirement benefit and to boost enrollment numbers. Also, work with your recruiting team to sell the value of your retirement plan to recruits, too. Those candidates may be considering jobs in other fields or at other companies that do not provide solid retirement benefits, and relaying the dollar value of your plan could help sway them to you.
Financial incentives for participation
Starting this year, employers can use small financial incentives to encourage enrollment in retirement plans. The IRS hasn’t yet specified what these incentives can and can’t include, but it’s largely expected to mean gift cards and other small rewards. Fleets can use this new incentive to engage with their employees as part of their retention efforts and to boost enrollment in retirement plans.
Waiting periods for retirement benefits
Even between now and the 2025 effective date for auto-enrollment of new employees, make retirement benefits available to new hires immediately — and educate them on the value this benefit provides them now and in the years ahead. Show them how much retirement accounts grow with regular employee and employer contributions and let your people know you’re committed to investing in their future.
To read more about the SECURE Act’s reforms, check out this article from Kiplinger.