Automatic Cash-Out Limits Under SECURE 2.0: Should Your Retirement Plan Adopt The $7,000 Threshold?

The required amendment adoption date for many of the  SECURE 2.0 Act of 2022 (SECURE 2.0) provisions is December 31, 2026. While plan sponsors may be focused on the significant mandatory changes imposed by SECURE 2.0, such as the  mandatory Roth catch-up requirement, plan sponsors should not forget about the optional provisions which may offer meaningful benefits for their plans and participants. This article calls attention to SECURE 2.0's optional provision that allows plan sponsors to increase the automatic cash-out limit for former employees' vested account balances from $5,000 to $7,000 and summarizes key considerations for plan sponsors evaluating whether to adopt this increased threshold.