The SECURE Act 1.0 was passed in 2019 to change retirement savings rules, followed by SECURE Act 2.0 in 2022. Some provisions took effect in 2023 and 2024, with additional updates rolling out in 2025.
Act Overview
In 2019, Congress passed the original Setting Every Community Up for Retirement Enhancement (SECURE) Act, referred to as SECURE Act 1.0. The legislation made significant changes to rules about saving for retirement as well as how distributions from retirement savings plans are handled. One of the best-known rule changes contained in SECURE 1.0 was an increase in the age at which required minimum distributions (RMDs) must start from 70.5 to 72.
This change allowed taxpayers to contribute to an individual retirement account (IRA) no matter how old they were. Also, non-spousal IRAs must now be distributed within 10 years of the original account owner’s death.
In 2022, Congress passed legislation that made further changes to retirement savings plans, as well as updating some provisions of the SECURE Act 1.0. The SECURE Act 2.0 contains multiple provisions to be enacted over several years.
The first set of rules from SECURE 2.0 went into effect in 2023, with an additional set of rules enacted in 2024. A few notable provisions will go into effect in 2025, including additional catch-up retirement contributions for taxpayers who are 60 to 63 years of age. Also new in 2025 is improved access to employer 401(k) plans for part-time employees and mandatory enrollment in employer plans.
Learn more about how these changes may affect you and provide more opportunities for reaching your retirement savings goals below.
Additional Catch-up Contributions for Ages 60-63
You may be familiar with the catch-up contributions to retirement savings plans that are allowed for taxpayers who are at least 50 years old. For the 2025 tax year, taxpayers who are 50 or older can contribute an additional $7,500 to a qualified employer plan, such as a 401(k) or 403(b).
Starting on January 1, 2025, the SECURE Act 2.0 allows for even higher catch-up contributions for taxpayers who are 60 to 63 years old. These additional catch-up contributions are indexed for inflation, and the amount is the greater of $10,000 or 50% more than the standard catch-up amount. For 2025, the standard catch-up contribution amount is $7,500, so the additional contribution limit is $11,250, or $3,750 more, for taxpayers who are aged 60 to 63.
Since the maximum employee contribution for all taxpayers regardless of age is $23,500 for 2025, this means that employees in the 60 to 63 age bracket could contribute up to $34,750 to an employer retirement plan, which is on top of any employer contributions for which the employee may be eligible. If an employee can take advantage of this additional contribution limit, they could potentially add $45,000 to their retirement savings over the course of four years, not including any earnings on those savings.
This new provision of SECURE 2.0 could be a huge boost in retirement savings for taxpayers who are able to max out their allowed contributions.
Automatic Enrollment and Portability for Employer Retirement Plans
Another provision of the SECURE Act 2.0 going into effect for 2025 is mandatory automatic enrollment in employer retirement plans. New 401(k) and 403(b) plans will be required to include a feature that automatically enrolls employees who qualify to participate in the plan. The initial amount for these employee elective salary deferrals ranges from 3% to 10%, and they can be increased each subsequent year by 1% until reaching at least 10% (but no more than 15%).
Employees will be allowed to opt out of being automatically enrolled in employee contributions, so it is important for employers to communicate clearly about the auto-enrollment rules for the plan. They should make sure employees understand the benefits of enrolling in retirement savings plans from the start so they can take advantage of compounding to boost their savings. And they should be certain employees know how they can opt out of mandatory enrollment if they want.
There are a few exceptions to the automatic enrollment rules, including:
- Plans that were established prior to Dec. 29, 2022
- Small businesses that normally have 10 or fewer employees
- New employers who have only been in existence less than three years
- Church and government retirement plans
The new auto-enrollment rules have the potential to help taxpayers who are early in their careers by establishing the habit of saving for retirement as soon as they start a new job. Saving even small amounts at a younger age would allow an employee to experience the benefits of compounding over many years. When you also consider the advantages of increasing retirement contributions each year, automatic enrollment could result in a substantial nest egg when it’s time to retire.
Another change going into effect in 2025 is related to the portability of employer plans, or how they can be moved from a former employer plan to a new one when changing jobs. Retirement plan service providers will now be allowed to offer employers automatic portability services, which would transfer an employee’s low balance retirement account to their new employer’s plan. This provision may be helpful for encouraging employees to roll over their retirement accounts instead of cashing out when they change jobs, which is especially common for employees with smaller balances in their accounts.
Improved Access to Retirement Plans for Part-Time Employees
Starting in 2025, part-time employees will have better access to retirement plans from their employers. This provision applies to those who are considered “long-term” employees. Previously, employers could require employees to work at least 1,000 hours in a 12-month period to be eligible to participate in the employer’s retirement plan. As of January 1, 2025, the SECURE Act 2.0 requires that employers allow employees with two consecutive years working 500 hours or more for the employer to participate in a 401(k) plan.
For the purposes of eligibility and vesting in the plan, service with the employer prior to 2021 is disregarded. According to the IRS, one of the primary goals of this provision of the SECURE Act 2.0 is to provide access to retirement savings for gig workers.
Changes Implemented Prior to 2025
Several SECURE 2.0 changes have already been implemented over the past few years. Here are a few highlights.
2023 Changes
- The age when RMDs must start was increased from 72 to 73, and it will increase further to 75 in 2033.
- The penalty for failing to take an RMD decreased from 50% to 25% of the amount of the distribution. For IRAs, it was decreased further to 10% if the failure to start RMDs was corrected in a timely manner.
- SECURE 2.0 allowed rollovers from 529 college savings plans to a Roth IRA for the beneficiary after 15 years. These rollovers are subject to some limits, including annual Roth IRA contribution limits and a lifetime limit of $35,000.
2024 Changes
- RMDs are no longer required from a Roth version of an employer plan, such as a 401(k) or 403(b).
- The $1,000 IRA catch-up contribution limit for people who are 50 and over is now indexed to inflation, so it could increase each year depending on cost-of-living increases determined by federal rules.
2026 Changes
More changes to retirement accounts are coming in 2026, including:
- An emergency savings account option may be added to Roth employer accounts.
- For employees who earn more than $145,000 in the previous year and are 50 or older, all catch-up contributions to an employer plan will be required to be made to a Roth account using after-tax dollars.
The SECURE Act 2.0 has significantly changed retirement plans over the past few years and will continue to do so in 2025 and beyond. Understanding how these changes may affect you could help you achieve your retirement goals earlier than you might have thought.
Editor Norah Layne contributed to this article.
