SECURE 2.0 Act

Key Takeaways

• SECURE 2.0 Act signed December 29, 2022 introduces 92 provisions affecting retirement savings with implementation dates spanning 2023 through 2033
• Enhanced catch-up contributions for ages 60-63 allow the greater of $10,000 or 150% of the regular catch-up amount, equaling $11,250 for 2025 and indexed for inflation thereafter
• Mandatory Roth catch-up requirement begins January 1, 2026 for employees whose FICA wages exceeded $145,000 in the prior year, with good-faith compliance period throughout 2026; final regulations apply for taxable years beginning after December 31, 2026
• RMD age increased to 73 for individuals born 1951-1959, and will increase further to age 75 for those born in 1960 or later starting in 2033
• Federal Saver's Match starts in 2027 replacing the Saver's Tax Credit with direct matching contributions up to $1,000 per individual deposited into retirement accounts
• Student loan payment matching permitted for plan years beginning after December 31, 2023, treating qualified loan payments as elective deferrals for matching purposes
• Emergency withdrawals up to $1,000 allowed annually for unforeseen financial needs starting in 2024, with repayment options and frequency restrictions
• Disaster distributions up to $22,000 permitted per federally declared disaster occurring after January 26, 2021, with three-year repayment options
• Domestic abuse victims can withdraw the lesser of $10,000 (indexed for inflation) or 50% of vested account balance without the 10% early withdrawal penalty
• PLESAs allow $2,500 in Roth-basis emergency savings within retirement plans for non-highly compensated employees, with monthly withdrawal access
• 529-to-Roth IRA rollovers permitted up to $35,000 lifetime maximum per beneficiary starting January 1, 2024, subject to 15-year and 5-year holding requirements
• Plan amendment deadlines extended to December 31, 2026 for most qualified plans, December 31, 2028 for collectively bargained plans, and December 31, 2029 for governmental plans

What Is the SECURE 2.0 Act?

The SECURE 2.0 Act of 2022, formally titled the Setting Every Community Up for Retirement Enhancement 2.0 Act of 2022, is comprehensive federal legislation enacted as Division T of the Consolidated Appropriations Act, 2023 (P.L. 117-328). President Biden signed the legislation into law on December 29, 2022, following bipartisan congressional approval. The Act contains 92 distinct provisions organized across multiple categories affecting defined contribution plans such as 401(k) and 403(b) plans, individual retirement accounts including traditional and Roth IRAs, defined benefit pension plans, governmental retirement systems including 457(b) plans, and simplified retirement vehicles such as SEP IRAs and SIMPLE IRAs.

The primary legislative objectives include increasing retirement savings rates among American workers, improving access to employer-sponsored retirement plans particularly for part-time workers and employees of small businesses, providing greater flexibility in distribution options during financial emergencies, and modernizing required minimum distribution rules to reflect increased longevity. Implementation follows a staggered timeline with provisions becoming effective on dates ranging from December 29, 2022 through 2033, allowing plan sponsors, financial institutions, and government agencies time to update systems and implement operational changes.

Major Provisions of the SECURE 2.0 Act

Enhanced Contribution Provisions

Ages 60-63 Super Catch-Up Contributions

Starting in 2025, individuals aged 60, 61, 62, and 63 can make enhanced catch-up contributions to 401(k), 403(b), and governmental 457(b) plans. The enhanced amount equals the greater of $10,000 (indexed for inflation) or 150% of the regular catch-up contribution limit. For 2025, the regular catch-up is $7,500, making 150% equal to $11,250. The enhanced catch-up applies only during the participant's 60th through 63rd years. Once an individual reaches age 64, the limit reverts to the standard catch-up amount. The provision became effective for taxable years beginning after December 31, 2024.

Mandatory Roth Catch-Up for Higher Earners

The SECURE 2.0 Act requires that catch-up contributions for employees whose FICA wages exceeded $145,000 during the preceding calendar year be made on a Roth (after-tax) basis. The $145,000 threshold is indexed for inflation in increments of $5,000. This provision becomes effective January 1, 2026. Final regulations issued in September 2025 provide a good-faith compliance transition period throughout 2026, with final regulations applicable to taxable years beginning after December 31, 2026. During 2026, plans and employers may rely on reasonable good-faith interpretations of the statutory requirements. Starting in 2027, strict compliance with final regulations is required. Plans that do not offer Roth contributions cannot accept catch-up contributions from employees subject to this requirement, effectively requiring plan sponsors to either add Roth capabilities or prohibit catch-up contributions from affected high earners.

Student Loan Payment Matching

Section 110 permits employers to make matching contributions based on qualified student loan payments made by employees, effective for plan years beginning after December 31, 2023. Employees self-certify that they made qualified education loan payments, and the employer makes matching contributions as if the employee had made elective deferrals. The matching must follow the same formula, vesting schedule, and eligibility requirements as regular matches. Qualified student loan payments include only payments on loans incurred by the employee for the employee's own education expenses. Student loan matching contributions are subject to the same annual limits as elective deferrals ($23,500 for 2025).

Federal Saver's Match

Beginning in 2027, the SECURE 2.0 Act replaces the existing Saver's Tax Credit with a federal matching contribution called the Saver's Match. The program provides a 50% federal matching contribution on retirement plan contributions up to $2,000, resulting in a maximum match of $1,000 per individual. Single filers must have adjusted gross income of $20,500 or less for the full match, phasing out completely at $35,500. For married couples filing jointly, the full match applies at AGI of $41,000 or less, phasing out at $71,000. These income thresholds are indexed for inflation starting in 2027. The match is deposited directly into the individual's retirement account rather than claimed as a tax credit.

Pension-Linked Emergency Savings Accounts (PLESAs)

PLESAs permit 401(k), 403(b), and governmental 457(b) plans to establish emergency savings accounts for non-highly compensated employees, effective for plan years beginning after December 31, 2023. The maximum balance is capped at $2,500, indexed for inflation. All PLESA contributions must be made on a Roth basis. Employer matching on PLESA contributions is permitted but must be deposited into the employee's regular retirement plan account. Employees must be permitted to withdraw funds at least once per calendar month, with the first four withdrawals per plan year provided fee-free.

Modified Distribution Rules

Increased Required Minimum Distribution Age

The Act increases the required minimum distribution age from 72 to 73 for individuals born 1951-1959, effective for distributions required after December 31, 2022. The RMD age increases further to 75 for individuals born in 1960 or later, effective for distributions required after December 31, 2032. The first RMD must be taken by April 1 of the calendar year following the year the individual reaches the applicable age. The penalty for failing to take RMDs was reduced from 50% to 25%, or 10% if corrected within a specified timeframe.

Elimination of Pre-Death RMDs for Roth Employer Plans

Roth accounts in 401(k), 403(b), and governmental 457(b) plans are no longer subject to required minimum distributions during the participant's lifetime, effective for taxable years beginning after December 31, 2023. This aligns their treatment with Roth IRAs and enhances the value of Roth employer accounts for estate planning.

Disaster Distributions

Participants affected by qualified disasters can take distributions up to $22,000 per disaster without the 10% early withdrawal penalty, applicable to disasters occurring on or after January 26, 2021. Distributions must be made within 179 days after the disaster is declared. Distributions can be repaid within three years, with repayment treated as a rollover. If not repaid, the distribution is included in gross income, but participants may spread the income ratably over three years.

Domestic Abuse Victim Distributions

The Act permits penalty-free distributions for victims of domestic abuse, effective for distributions made after December 31, 2023. Eligible individuals can withdraw the lesser of $10,000 (indexed for inflation) or 50% of vested account balance. The distribution must be made within one year after experiencing domestic abuse, based on participant self-certification.

Emergency Personal Expense Distributions

Starting in 2024, plans may permit one penalty-free emergency distribution per calendar year, limited to the lesser of $1,000 or the participant's vested balance minus $1,000. The distribution is exempt from the 10% penalty but subject to income tax. Participants self-certify emergency need without documentation. The distribution can be repaid within three years. If not repaid, participants cannot take another emergency distribution for three years unless they make subsequent contributions at least equal to the prior distribution.

Terminal Illness Exemption

The Act provides an exemption from the 10% early withdrawal penalty for distributions to terminally ill individuals, effective for distributions after December 29, 2022. Terminal illness is defined as having an illness or condition reasonably expected to result in death within 84 months (seven years) of physician certification.

529 Plan to Roth IRA Rollovers

Section 126 permits tax-free and penalty-free rollovers from 529 education savings plans to Roth IRAs, effective for distributions after December 31, 2023. The lifetime aggregate rollover limit is $35,000 per beneficiary. The 529 account must have been maintained for at least 15 years, and contributions within the five years before rollover are not eligible. Annual rollovers are limited to the Roth IRA contribution limit ($7,000 for 2025) minus other IRA contributions. The Roth IRA must be in the beneficiary's name, and the beneficiary must have earned income at least equal to the rollover amount.

Plan Administration and Access Changes

Automatic Enrollment Requirement

401(k) and 403(b) plans established after December 29, 2022 must automatically enroll participants at an initial rate of at least 3% but not more than 10% of compensation, with annual increases of 1% until reaching 10-15%, effective for plan years beginning after December 31, 2024. Plans established on or before December 29, 2022 are grandfathered. Exemptions apply to businesses with 10 or fewer employees, new businesses in existence less than three years, church plans, and governmental plans.

Expanded Part-Time Worker Coverage

The Act reduces the requirement for long-term part-time employee participation from three consecutive years to two consecutive years for plan years beginning after December 31, 2024. Employees must work at least 500 hours per year. Employer matching to part-time employees remains optional.

Roth SEP and SIMPLE IRAs

The Act permits employers to offer Roth contribution options for SEP IRAs and SIMPLE IRAs, effective for taxable years beginning after December 31, 2022. Roth contributions are made by the employer but treated as after-tax income to the employee in the year of contribution.

Increased Mandatory Cash-Out Limit

The maximum involuntary cash-out threshold increased from $5,000 to $7,000, indexed for inflation. Balances between $1,000 and $7,000 must be rolled to an individual retirement account if the participant does not elect distribution or rollover.

Plan Amendment Deadlines

Plan sponsors must adopt written amendments to reflect SECURE 2.0 changes. The following deadlines apply:

Considerations for SECURE 2.0 Provisions

Many SECURE 2.0 provisions interact with existing retirement planning strategies, tax planning techniques, Social Security claiming decisions, and distribution sequencing approaches. The increased RMD ages affect the timing of mandatory taxable distributions, which impacts decisions about Roth conversions and distribution sequencing from multiple account types. The various penalty-free distribution provisions create new flexibility but must be evaluated in context of overall financial planning including emergency fund adequacy, insurance coverage, and retirement income sustainability.

Individual circumstances vary dramatically based on age, income, tax bracket, retirement goals, family situation, health status, existing retirement account balances, other assets and income sources, state tax rules, and employer plan features. Comprehensive financial planning software like MaxiFi can model how SECURE 2.0 provisions interact with these multiple variables, including analyzing tax-efficient contribution strategies, evaluating Roth versus pre-tax trade-offs, modeling distribution sequencing strategies, and projecting lifetime tax liability under different planning approaches.