The Secure 2.0 Act of 2022 is one of the most significant updates to U.S. retirement savings laws in decades. Its changes were designed to help Americans save more for retirement, access their savings in emergencies, and enjoy greater flexibility in retirement planning. While some of its provisions took effect in 2023 and 2024, many more important changes are coming in 2025 and 2026.
Whether you’re working full-time, self-employed, or nearing retirement, these updates could impact how much you can save, when you can withdraw, and even how your employer contributes to your retirement account.
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Key Changes Taking Effect in 2025–2026
1. Mandatory Roth Catch-Up for High Earners (2026)
Starting in 2026, individuals aged 50 or older who earn more than $145,000 in W-2 wages must make their catch-up contributions to a Roth account (after-tax) rather than a traditional pre-tax 401(k). This rule was originally planned for 2024 but was delayed until 2026 due to implementation challenges.
2. Higher Catch-Up Contributions for Ages 60–63 (Starting 2025)
If you’re between ages 60 and 63, you’ll be allowed to make larger catch-up contributions to your employer-sponsored retirement plan. Starting in 2025, this limit will be:
- The greater of $10,000 or 150% of the standard catch-up contribution (indexed for inflation)
This change gives people close to retirement age more time to boost savings.
3. Emergency Savings Within 401(k) Plans (2025)
Employers may offer emergency savings accounts within 401(k) plans starting in 2025. Employees can contribute up to $2,500 (or a lower limit set by the employer) after-tax, and make four penalty-free withdrawals per year.
These funds are designed to help workers avoid early withdrawal penalties and taxes when facing unexpected expenses.
4. Student Loan Matching (Starting 2025)
Employers will be able to match student loan payments as if they were retirement contributions. That means even if you can’t afford to contribute to your 401(k) due to loan payments, your employer can still contribute on your behalf.
This change could be especially helpful for younger workers juggling debt and retirement goals.
5. Automatic Enrollment and Auto-Escalation (Applies to New Plans)
For retirement plans created after December 31, 2024, automatic enrollment becomes mandatory. New employees will be enrolled at a minimum 3% contribution rate, which must increase by 1% each year up to at least 10%, and not more than 15%.
Although this doesn’t affect existing plans, it will have a major impact on new employees entering the workforce.
6. Changes to Required Minimum Distributions (RMDs)
The age to begin Required Minimum Distributions increased to:
- Age 73 starting in 2023
- Age 75 starting in 2033
Additionally, the penalty for failing to take an RMD has been reduced from 50% to 25%, and potentially down to 10% if corrected in time.
How This Affects Workers, Employers, and Retirees
These changes aim to increase participation, encourage savings, and add flexibility for both workers and employers. For workers, especially those in their 50s and 60s, these new contribution opportunities can make a meaningful difference. Younger employees benefit from auto-enrollment and the ability to build emergency funds or benefit from student loan matching.
Employers will need to update payroll systems, educate employees, and possibly redesign retirement plans to meet the new rules. Many are working with plan providers now to ensure 2025 compliance.
Frequently Asked Questions (FAQs)
1. What happens if I don’t comply with the Roth catch-up rule in 2026?
If you earn over $145,000 and your employer doesn’t offer a Roth option, you won’t be able to make catch-up contributions at all unless they update the plan to include Roth. Employers are expected to make this change before 2026.
2. Will the emergency savings account be mandatory?
No. Employers have the option to add it to their 401(k) plan. It is not required, but many companies are expected to offer it as a benefit to improve employee retention and financial well-being.
3. Can I contribute to both an emergency savings account and a Roth IRA?
Yes. The emergency savings feature is inside a 401(k) and does not impact your eligibility for a separate Roth IRA, provided you meet the income limits for Roth contributions.
4. If I’m self-employed, do these rules apply to me?
Many provisions apply to workplace retirement plans like 401(k)s. However, you can still benefit from increased contribution limits and RMD changes through SEP IRAs, Solo 401(k)s, and other self-employed retirement plans.
5. When do the higher catch-up contributions start?
The enhanced catch-up contributions for ages 60–63 begin in 2025. Make sure your employer updates plan documents and you confirm eligibility with your HR or benefits department.
6. Do these changes affect my Social Security benefits?
No. These retirement plan changes do not impact Social Security payments or eligibility. However, stronger savings through 401(k)s and IRAs may reduce your reliance on Social Security in retirement.