The Secure Act 2.0: An Introduction to the New Rules for Retirement Planning

The Secure Act 2.0: An Introduction to the New Rules for Retirement Planning

The Secure Act 2.0 is now in effect, which is great news for retirement savers everywhere. That’s because this bill is packed with new ways to boost and protect your nest egg savings now, and into the future.

In this article, you’ll be exposed to how the new legislation is set to impact retirement from multiple angles. You’ll see the changes affecting retirement accounts in general, and how employers and employees will be able to save with updated policies to workplace plans.

General Retirement Changes

1. RMD Age Increase & Penalty Reduction

The required minimum distribution (RMD) age has risen to 73, and is set to increase again to 75 in 2033. The penalty for not taking these mandatory retirement withdrawals has also decreased from 50% to 25%.

2. Retirement Fund Tracking

In 2025, retirement plan participants and beneficiaries can use an online database to locate former employer retirement plan administrators and claim any forgotten funds. Plan administrators will be required to submit their information to the Department of Labor for inclusion in the database.

3. 529 Plans to Roth IRA Rollovers

Starting in 2024, you can roll over a 529 account open for over 15 years into a Roth IRA for the plan’s beneficiary. This eliminates the previous penalty for withdrawals made for non-educational purposes and allows a rollover of up to $35,000 from your 529 account to a Roth IRA for your loved ones or even yourself.

4. Catch-Up Contributions Changes

In 2024, catch-up contributions to IRAs from those age 50 or older will be adjusted for inflation. This could potentially result in an increase in catch-up contribution limits every year. Additionally, starting in 2026, individuals between ages 60-63 will be able to make catch-up contributions up to $10,000 with adjustments for inflation to their IRA.

Lastly, starting in 2025, individuals between ages 60-63 will also be able to contribute up to $10,000 to their workplace retirement plan, with those contributions adjusted for inflation as well. However, those earning $145,000 or more must make all catch-up contributions with after-tax money to a Roth account.

Changes Impacting Future Workplace Retirement Plans

1. Auto-Enrollment for New Retirement Plans

If a workplace retirement plan is created after Dec. 29, 2022 it will have to follow new auto-enrollment rules. Employers will be required to enroll workers in their plan at a minimum of 3% and a maximum of 10%, starting in 2025. Exceptions to this rule will include new businesses under 3 years and businesses with 10 or fewer employees.

2. Auto-Escalation for New Retirement Plans

If a workplace retirement plan is created after Dec. 29, 2022 it will also have to follow new escalation rules starting in 2025, with contribution percentages automatically increasing by 1% each new plan year after a full year of service, until reaching a minimum of 10%. Again, exceptions apply to new businesses under 3 years and businesses with 10 or fewer employees.

3. New Starter 401(k) & 403(b) Plans

The Secure Act 2.0 offers “Starter K” plans for businesses without retirement plans, with salary deferral limits matching those of IRAs and additional catch-up contributions for participants age 50 or older.

New Retirement Options for Employees

1. Emergency Savings for Employees

Employers can now help their employees establish an emergency fund by automatically enrolling them into a designated emergency savings account. These accounts have a cap of $2,500 (or lower depending on the choices of the employer) and allow for 4 withdrawals each year that are free of taxes and penalties.

2. Emergency Withdrawals Employees

Employees can now make a one-time, penalty-free withdrawal of up to $1,000 per year from their retirement account, but only for emergency expenses.

3. Auto-Transfer of Retirement Accounts

Employees’ retirement accounts can now be automatically transferred to a new employer’s plan, as long as the amount is not greater than $5,000.

New Matching Options for Employers

1. Roth Matches

Employers can now offer vested matches to their employees’ Roth retirement accounts, which were previously made with pre-tax dollars. With this change, matches can be made on an after-tax basis, allowing for tax-free growth and withdrawals in retirement.

2. Emergency Savings

Employer contributions to emergency savings accounts may also be matched, depending on plan guidelines.

3. Student Loan Repayment Assistance

Employers can now support their employees in paying off student loans by matching their loan repayments with contributions to their retirement accounts. For example, if an employer offers a 30% match to 401(k) accounts, they could contribute $150 to an employee’s retirement plan when the employee makes a $500 student loan repayment.

How Fischer Retirement Services Can Help

At Fischer Investment Strategies it’s our mission to help our clients get the most out of their retirement plans. Thankfully, the Secure Act 2.0 has made that easier than ever.

The new law has enabled more opportunities to save, and fewer chances of being set back on your retirement journey. As your financial partner, we’ll help you navigate its changes to put a best foot forward going into your life’s next chapter.

You can call us directly at our Westlake office at (805) 418-7686, or our San Clemente office at (949) 433-7768. Feel free to also schedule a complimentary consultation at a time that works best for you.


This commentary reflects the personal opinions, viewpoints and analyses of the Fischer Investment Strategies, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Fischer Investment Strategies, LLC or performance returns of any Fischer Investment Strategies, LLC client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Fischer Investment Strategies, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Financial Advisor at Fischer Investment Strategies | Website

Ted Fischer is a Fee-Only Certified Financial Planner® & fiduciary, and the founder of Fischer Investment Strategies.

Drawing from more than 25 years of experience in the financial services industry, Ted's expertise includes retirement planning, investment analysis, tax planning, estate planning, and insurance.

Ted has an extensive academic background. He received his Certified Financial Planning (CFP®) designation from UCLA in 2011. He became a Qualified Plan Financial Consultant (QPFC®) and an Accredited Investment Fiduciary (AIF®). Ted has a Bachelor of Science in Marketing, with a minor in Finance, from San Diego State University.


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