The SECURE Act and SECURE 2.0 made some of the biggest retirement-plan changes in recent years. These laws expanded retirement savings opportunities, delayed required withdrawals from retirement accounts, and introduced new benefits for workers, retirees, and families.
If you contribute to a retirement plan, have a retirement account, or are planning for retirement, understanding these changes can help you make the most of your tax-advantaged savings options.
What Is the SECURE Act?
SECURE stands for the Setting Every Community Up for Retirement Enhancement Act.
There are two major versions of the law:
- SECURE Act (SECURE 1.0), enacted in December 2019
- SECURE 2.0, enacted in December 2022 as part of the Consolidated Appropriations Act, 2023
Together, these laws modernized retirement-plan rules and expanded access to workplace retirement savings.
Required Minimum Distributions (RMDs)
Required Minimum Distributions, or RMDs, are the minimum amounts that must be withdrawn annually from certain retirement accounts once you reach a specified age.
SECURE legislation gradually increased the age at which RMDs begin.
| Law | RMD Starting Age |
|---|---|
| Before the SECURE Act | 70½ |
| SECURE Act (2019) | 72 |
| SECURE 2.0 | 73 for individuals born in 1951-1959 |
| SECURE 2.0 | 75 for individuals born in 1960 or later |
By delaying RMDs, retirees can keep their money invested longer and potentially benefit from additional tax-deferred growth.
Example
If you were born in 1962, you generally won't be required to begin taking RMDs until age 75, giving your retirement savings several additional years to grow before mandatory withdrawals begin.
Enhanced Catch-Up Contributions
Catch-up contributions allow individuals age 50 and older to contribute more to certain retirement plans than younger workers.
SECURE 2.0 introduced a higher catch-up contribution limit for participants ages 60 through 63.
For eligible workers in that age range, the catch-up amount may be:
- $10,000, or
- 50% more than the regular catch-up limit, if that amount is greater
The actual limit may be adjusted periodically for inflation.
Why This Matters
Workers nearing retirement often want to boost savings during their highest earning years. The enhanced catch-up contribution provision helps them save more in tax-advantaged accounts before retiring.
Example
A taxpayer who is 61 years old may be eligible to make a larger catch-up contribution than was previously allowed, helping accelerate retirement savings during the final working years.
Automatic Enrollment in New Retirement Plans
SECURE 2.0 encourages participation in workplace retirement plans through automatic enrollment.
Most new 401(k) and 403(b) plans established after December 29, 2022, are generally required to:
- Automatically enroll eligible employees
- Use an initial contribution rate between 3% and 10% of pay
- Increase contribution rates over time, generally up to 10% to 15%
Employees may still opt out or change their contribution percentage if permitted by the plan.
Why This Matters
Research has consistently shown that automatic enrollment increases retirement-plan participation. Many workers begin saving simply because the process is automatic.
Expanded Access for Part-Time Workers
Long-term, part-time employees now have improved access to employer-sponsored retirement plans.
Under SECURE 2.0:
- The service requirement was reduced from three consecutive years to two consecutive years
- Similar participation rules were expanded to certain 403(b) plans
Why This Matters
Part-time workers who previously had limited access to retirement benefits may now qualify sooner, allowing them to build retirement savings earlier.
Student Loan Payment Matching
One of the most innovative SECURE 2.0 provisions helps employees who are balancing retirement savings with student loan repayment.
Employers may now treat qualified student loan payments as retirement plan contributions for matching purposes.
How It Works
An employee who uses income to pay student loans rather than contribute to a retirement plan may still receive employer matching contributions if the plan allows this feature.
Example
Suppose an employee spends available income on student loan payments and contributes nothing directly to a 401(k). If the employer offers student-loan matching, the employee may still receive matching retirement contributions based on those loan payments.
This helps workers avoid missing out on valuable employer retirement benefits while paying down education debt.
Emergency Savings Accounts
SECURE 2.0 created new opportunities for employers to offer emergency savings accounts linked to retirement plans.
Key features include:
- Contributions generally limited to $2,500
- Linked to an employer-sponsored retirement plan
- Funds can typically be accessed without many of the restrictions that apply to retirement accounts
Why This Matters
Many people withdraw retirement funds early because they lack emergency savings. These accounts provide a separate source of funds for unexpected expenses while helping preserve long-term retirement savings.
529 Plan-to-Roth IRA Rollovers
Families with unused education savings may benefit from one of SECURE 2.0's most popular provisions.
Eligible taxpayers can roll over funds from a 529 plan to a Roth IRA for the beneficiary, subject to specific requirements.
Key Rules
- Lifetime rollover limit of $35,000
- The 529 plan must generally have been open for at least 15 years
- Annual Roth IRA contribution limits still apply
- Other eligibility requirements may apply
Why This Matters
Many families worry about overfunding a 529 education account. This provision provides additional flexibility by allowing unused funds to be repurposed for retirement savings.
How SECURE 2.0 Benefits Taxpayers
The law offers several advantages for individuals and families.
More Time for Retirement Assets to Grow
- Later RMD ages allow retirement savings to remain invested longer.
- Retirees gain additional flexibility when managing taxable withdrawals.
Increased Retirement Savings Opportunities
- Higher catch-up limits can help older workers boost retirement savings.
- Automatic enrollment encourages consistent participation.
Expanded Access to Retirement Benefits
- Part-time employees may qualify sooner.
- Student loan borrowers may receive employer retirement contributions even while focusing on debt repayment.
Greater Financial Flexibility
- Emergency savings accounts provide access to short-term funds.
- 529-to-Roth rollovers offer new planning opportunities for education savings.