While the pandemic and its economic repercussions have (rightly) dominated the news for nearly two years, they have obscured some dramatic and longer-lasting changes that have been rolled out for 401(k) investors.
The Setting Every Community Up for Retirement Enhancement Act, better known as the Secure Act, became law on Dec. 20, 2019, just before the pandemic took hold. That, plus further regulatory tweaks by the Biden administration in 2021, have led to three major additions to retirement plans and one loss for some investors.
“I’ve never seen more change in the 401(k) space in my career as I have in the past 18 months,” says Matt Wolniewicz, a 30-year veteran of the retirement-plan industry. Wolniewicz is now the president of a new financial-services consortium called Income America. These recent changes have dramatically altered the landscape for investors planning for retirement.
This time, good news comes in threes: Investors interested in sustainable funds will soon find more options in their plans; those looking for guaranteed income in retirement will have an annuity option; and people working at smaller companies that don’t offer retirement plans may soon find themselves with a 401(k). Investors who took advantage of an unusual provision that allowed them to put more money into a Roth IRA may find that loophole closed soon.