The SECURE 2.0 Act was passed in December 2022 and made major changes to the operation of retirement plans. Some of those changes went into effect in 2023 but most of the major changes are effective in 2024 or later. Below are some of the major changes that could impact your retirement plans:
  • For individuals who earned more than $150,000 in W-2 wages in the prior year and are age 50 or older who wish to make catchup contributions to their 401(k) plan, the catchup contribution will need to be done on a Roth basis rather than on a pre-tax basis. There has been much publicity of this since it was originally effective in 2024, but on August 25, 2023, IRS delayed this until 2026.
  • Starting in 2025, for plans that allow catchup contributions, there will be a higher catchup limit for participants who attain ages of 60-63.  This amount is $11,750 for the 2026 year.
  • The original SECURE Act permitted the retroactive adoption of a new retirement plan as late as the due date of the business tax return (with extension if the return is extended). SECURE 2.0 Act permits amendments increasing benefits to be adopted retroactively as well. 
  • All 401(k) plans adopted after December 29, 2022 for companies that “regularly” employ more than 10 employees will need to be amended to include Auto-Enrollment and Auto-Escalation for plan years beginning in 2025.
  • SECURE 2.0 Act changed the age for participants to begin receiving Required Minimum Distributions (RMDs) from retirement plans and IRAs.  For anyone born on or after January 1, 1951, they must start taking their RMDs no later than April 1, 2025.
  • SECURE 2.0 Act also updated the rules pertaining to Long Term Part Time Employees.  Effective in 2026, any employee who worked between 500 and 1,000 hours in any two consecutive years beginning in 2023 may need to be given the ability to make their own 401(k) contributions beginning in 2026.
  • SECURE 2.0 Act provides significant tax credits for certain companies adopting a defined contribution plan for the first time. The available credits can be used to offset startup costs and employer contributions for up to the first three years of the plan.
​All amendments for the CARES Act, SECURE Act and the SECURE 2.0 Act are required to be adopted by plan sponsors no later than December 31, 2026.  Any plan that terminates in the interim will need to be amended for these changes.
​Annually, the IRS updates the limitations applicable for retirement plans.  Please click this link to see current and past limitations.