The SECURE 2.0 Act, passed in December 2022, is poised to reshape retirement planning for millions of Americans. Starting this year and rolling out through 2027, the law introduces major changes that affect how much you can save, when you can withdraw, and even how your employer contributes to your retirement.For anyone serious about securing their financial future, understanding these shifts is essential. Here’s a breakdown in simple, actionable terms.

Beyond just contribution limits and Roth rules, SECURE 2.0 is designed to make retirement accounts more flexible and accessible. Emergency access provisions, student loan matching, and 529 rollovers all signal a shift toward a system that accommodates real-life financial needs while still encouraging long-term saving. This is a recognition that Americans juggle multiple financial priorities at once, from paying off debt to planning for unexpected expenses.

Older workers, in particular, stand to gain significantly from these changes. Catch-up contribution limits for those aged 60–63 have been substantially increased, allowing them to maximize savings as they near retirement.

Combined with the new Roth rules for high earners, the legislation encourages both aggressive saving and smarter tax planning, giving Americans tools to optimize their nest egg even in the later stages of their careers.

For younger workers, the act provides incentives to save while managing other financial obligations. Employer matching of student loan repayments, along with automatic enrollment in retirement plans, helps build savings early without forcing difficult trade-offs.

By making saving easier and more integrated into everyday life, SECURE 2.0 aims to close the participation gap and reduce the risk of Americans retiring without enough funds.

Finally, the law also reflects a broader shift in retirement planning philosophy. By replacing the Saver’s Credit with a federal match and allowing unused 529 funds to flow into Roth IRAs, the act emphasizes tangible benefits and practical solutions over theoretical tax advantages.

Key IRS retirement shifts under SECURE 2.0 for 2025 include:

• Increased catch-up contribution limits for ages 60-63. In 2025, those in this age group can make catch-up contributions up to $11,250 to workplace plans (401(k), 403(b)), up from $7,500 previously, with IRA catch-ups also increased. This allows older workers to put more money into tax-advantaged retirement accounts as they near retirement.
• Starting 2026, high earners (above $145,000 in prior year wages) making catch-up contributions must put them into Roth (after-tax) accounts, meaning withdrawals in retirement will be tax-free.
• The required minimum distribution (RMD) age increased from 72 to 73 as of 2023 and will rise to 75 by 2033. Roth accounts are exempt from RMDs. Failure to take RMDs will see penalties reduced from 50% to 25%.
• More part-time workers can participate in employer retirement plans (401(k)s, 403(b)s) if they work at least 500 hours per year for two consecutive years.
• Emergency withdrawals of up to $1,000 from retirement accounts are allowed once per year without the usual 10% early withdrawal penalty.

These provisions collectively aim to help more Americans save for retirement, increase contributions closer to retirement age, and provide more flexibility in accessing savings. However, the shift to mandatory Roth catch-up contributions for higher earners could change tax outcomes at retirement.

The IRS has issued final regulations on some of these rules, and employers are adapting plans accordingly. It's important to review how these changes may affect individual retirement goals and tax planning to avoid risks to your nest egg from unexpected tax treatments or distribution requirements.

These changes are intended to empower individuals across all income levels to grow their retirement savings steadily, while still offering flexibility for unexpected life events.

How do SECURE 2.0 catch-up changes affect high earners under $145,000

The SECURE 2.0 Act catch-up contribution changes affect high earners under $145,000 by exempting them from the new mandatory Roth catch-up contribution rule that applies to those earning over $145,000.

Specifically for catch-up contributions starting in 2026:

• Individuals who earn $145,000 or less in the prior calendar year (based on Social Security wages from a single employer) can continue to make catch-up contributions on either a pre-tax (traditional) or Roth (after-tax) basis according to their plan's options. They are not required to switch to Roth-only contributions under SECURE 2.0.
• Meanwhile, those earning more than $145,000 must make their catch-up contributions exclusively as Roth contributions (after-tax).

Additionally, starting in 2026, people aged 60 to 63 can make higher catch-up contributions (the greater of $10,000 or 150% of the standard catch-up amount), and this limit is indexed for inflation. The Roth catch-up requirement would apply to high earners making these larger catch-ups starting in 2026.

What planning steps should someone <$145,000 take before 2026

Before 2026, someone earning under $145,000 should take several financial and tax planning steps to optimize retirement savings and minimize potential tax impacts from SECURE 2.0 catch-up contribution changes:

• Review catch-up contribution strategy: Currently, those under $145,000 can make catch-up contributions either pre-tax (traditional) or Roth. Choosing to maximize pre-tax contributions in 2025 could reduce taxable income before the Roth-only catch-up rule kicks in 2026 for higher earners.
• Consider making Roth conversions in 2025 while tax rates and income may be favorable. This can help manage future tax liability by shifting traditional IRA or 401(k) assets into Roth accounts, where qualified withdrawals are tax-free.
• Maximize Health Savings Account (HSA) contributions if eligible. HSAs provide triple tax advantages and reduce taxable income, which could help keep adjusted income lower for the Roth catch-up rules in 2026.
• Use Flexible Spending Accounts (FSAs) or other employer benefits that reduce taxable income through pre-tax payroll deductions.
• Begin or revise charitable giving plans now. Donations made in 2025 may receive more favorable tax treatment before changes taking effect in 2026.
• Work with financial advisors or tax professionals to model income levels, tax brackets, and plan contributions for 2025 and 2026 to ensure the best balance between tax savings and retirement funding.
• Review your overall financial goals and investment risk to ensure alignment with retirement timing, especially given market volatility and new tax/spending legislation.

Starting these planning steps early in 2026 allows flexibility and better preparation before the SECURE 2.0 Roth catch-up contribution rule fully applies in 2026.

What Are Roth Catch-Up Contributions and Who Needs to Make Them?

One of the biggest changes under SECURE 2.0 is the mandatory Roth catch-up contribution rule. Beginning in 2026, anyone over 50 who earns more than $145,000 will need to funnel their extra 401(k) contributions into a Roth account, which is after-tax. This means you pay taxes now but can withdraw the money tax-free during retirement.

If you’re a high earner, this could significantly change your tax planning. The IRS has provided a grace period, so enforcement is effectively delayed until 2027, giving employers time to adjust payroll systems. For workers, this rule offers a clear benefit: tax-free retirement withdrawals. But it also requires planning now to understand the impact on your current tax situation.

How Will Automatic Enrollment Affect My Savings?

Starting in 2025, employers will have to automatically enroll employees in 401(k) and 403(b) retirement plans. This step aims to make saving the default choice, helping more Americans build a nest egg over time.

For employees, this is mostly a positive change. If you do nothing, contributions start automatically. However, if you prefer to manage your savings manually or want a different contribution rate, you’ll need to actively opt out or adjust your plan. The goal is simple: more people saving more consistently, reducing the risk of outliving your savings in retirement.

Can I Access My Retirement Funds in an Emergency?

SECURE 2.0 recognizes life happens. Beginning in 2024, employees can withdraw up to $1,000 per year from their retirement accounts for emergencies without incurring the usual 10% penalty.

The catch? These withdrawals must be repaid within three years to avoid taxes and penalties. Think of it as a short-term bridge during tough times, like unexpected medical bills or urgent home repairs. This feature makes retirement accounts more flexible and practical for everyday financial challenges, without derailing long-term savings.

How Does Student Loan Repayment Affect Retirement Savings?

Paying off student debt while trying to save for retirement can feel like a tug-of-war. SECURE 2.0 introduces a smart solution: employers can match your student loan payments with contributions to your retirement account starting in 2024.

This means you could be paying off debt and simultaneously boosting your retirement savings. For younger workers or those with significant loans, this could accelerate your ability to retire comfortably, without having to choose between debt repayment and future savings.

Can Unused 529 Funds Be Put to Work in Retirement?

Another user-friendly change under SECURE 2.0 allows unused 529 education savings funds to be rolled over into a Roth IRA, starting in 2024, up to a lifetime maximum of $35,000.

This offers flexibility for families who’ve saved for college but find their children receive scholarships or attend school at lower costs. Instead of letting that money sit idle, you can redirect it to your retirement, making sure your savings are working hard, even if your education goals change.

What About the Saver’s Credit? Will It Change?

The Saver’s Credit, traditionally a tax incentive for lower-income savers, will be replaced in 2027 by a federal “Saver’s Match.” This match will give a 50% contribution match up to $2,000, with a maximum benefit of $1,000.

This change is designed to encourage more consistent retirement contributions among lower-income Americans. It’s a direct incentive, giving tangible benefits for saving, rather than a delayed tax credit. For those eligible, this could represent a meaningful boost to their retirement accounts.

Who Benefits Most From These Changes?

• Older Workers (60–63): Can make higher catch-up contributions in 2025, up to $34,750 in total. This is a big opportunity for those looking to maximize savings before retirement.
  
  
• High Earners Over 50: Roth catch-up contributions allow for tax-free withdrawals in retirement. Planning for this now can prevent surprises.
  
  
• Workers Paying Off Student Loans: Employer matching contributions starting in 2024 can accelerate both debt repayment and retirement savings.
  
  
• Lower-Income Individuals: The Saver’s Match starting in 2027 provides a direct incentive to save, replacing the older Saver’s Credit system.
  
  
• Families with Unused Education Savings: Rolling over 529 funds to a Roth IRA allows more flexibility and continued growth of retirement savings.
  
  

Why You Should Reevaluate Your Retirement Plan Now

These changes are more than technical adjustments—they fundamentally shift how Americans save and access retirement funds. Whether you’re decades away from retirement or nearing the finish line, it’s a signal to review your plan.

• Check your contribution strategy to take advantage of higher limits.
  
  
• Reassess tax planning, especially if you’ll be making Roth contributions.
  
  
• Consider the emergency withdrawal option as a safety net.
  
  
• Explore if student loan matching or 529 rollovers could enhance your savings.
  
  

Consulting a financial advisor is wise. They can help you navigate the new rules, optimize your contributions, and ensure your retirement plan aligns with your long-term goals.