Passed in 2022, the SECURE 2.0 Act made updates to strengthen the retirement system for both employers and employees. Here’s a rundown of what’s become effective and what to expect.
Effective January 1, 2026
Roth Deferrals for High Earners
Participants aged 50+ who earned more than $150,000 in FICA wages in the previous year (2025) must make their catch-up contributions on an after-tax Roth basis starting in 2026. This rule was initially scheduled for 2024 but was delayed by the IRS.
Effective January 1, 2025
Automatic Enrollment and Increases
Effective for plan years beginning in 2025, most 401(k) plans established after December 29, 2022 must automatically enroll eligible employees at a default deferral rate (between 3% and 10%), with the deferral increasing by 1% each year up to 15%. To comply, the Nextep 401(k) has implemented this for impacted plans. Employees can customize or opt out of the automatic deferral and increases.
Higher Catch-Up Contributions
The catch-up limit for participants aged 60 – 63 increases to the greater of $10,000 or 150% of the regular catch-up limit.
Long-Term, Part-Time (LTPT) Eligibility
LTPT employees can now qualify to contribute to the company’s 401(k) after working two consecutive years instead of three. They also need to have at least 500 hours of service during that time.
Effective January 1, 2024
Roth RMD Elimination
Beginning in 2024, Roth 401(k) accounts are no longer subject to mandatory withdrawals, or Required Minimum Distributions (RMDs), during the participant’s lifetime, aligning them with Roth IRAs.
Pre-tax retirement accounts, including traditional 401(k) and 403(b) plans, traditional IRAs, SEP IRAs, and SIMPLE IRAs, are still subject to the RMD regulations.
Student Loan Match
Starting in 2024, employers may (but don’t have to ) match an employee’s qualified student loan payments by contributing to their retirement account.
Emergency Withdrawals
Starting in 2024, plans may (but don’t have to) allow an annual penalty-free withdrawal of up to $1,000 for specific personal or family emergency expenses.
Effective January 1, 2023
RMD Age Increase
The age for taking Required Minimum Distributions (RMDs) increased to 73 starting January 1, 2023. It will rise again to 75 beginning in 2033. According to SECURE 2.0 Act, people of those ages must withdraw a minimum amount from their retirement accounts each year, which counts as taxable income.
