The Secure Act 2.0, which brings several changes to the retirement system, is now law. Whether you’re decades from retirement or quickly approaching it, some of these changes will likely impact you and your financial plan. Here is a quick overview of the law, and the top points you should know about.
Secure Act 2.0: Student Loan and Roth Account Matching
Employers will be able to match employees’ student loan payments to a workplace retirement account beginning in 2024.
Additionally, effective immediately, employers can offer Roth account matching. Before this change, matches on employer plans were pre-tax. Now, you can make these contributions after taxes, which means the earnings can grow tax-free. These contributions must be nonforfeitable, and will be included in the employee’s income for the year the contribution is made.
Note that a change like this might not happen right away. Employers will likely need time to set up their systems for additional account matching, so stay in touch with your employer to find out when these programs might be available.
Emergency Savings
Beginning in 2024, some retirement plans could add an emergency savings component. This savings option is Roth account eligible, and contributions are limited to $2,500 or less. Some contributions could be eligible for an employer match. The first 4 withdrawals per year would be exempt from taxes and penalty fees.
529 Plan Rollovers
As of 2024, 529 plan assets can be rolled over to a Roth IRA for the beneficiary 15 years after the plan was created. These rollovers would be subject to annual Roth contribution limits, and no more than $35,000 could be moved during the beneficiary’s lifetime.
Additionally, contributions to the 529 plan within the last 5 years cannot be moved to a Roth IRA.
Automatic Plan Enrollment
Business owners should also be aware that, as of 2025, this law requires eligible employees to be enrolled in new 401(k) and 403(b) plans automatically, starting at a contribution rate of at least 3 percent. Not all businesses will have to do this, however. Exemptions include businesses that are less than 3 years old, governmental plans, SIMPLE plans, church plans, and employers with 10 or less employees.
The Secure Act 2.0 also allows retirement plan service providers to transfer some low-balance workplace retirement accounts to a plan at a new job.
Other Secure Act 2.0 Changes
The Secure Act brings additional changes including increased RMD age limits, higher catch-up contributions, changes to qualified charitable contributions, and other annuity changes. For more information, check out the official Secure Act 2.0 document here.
What does this mean for you?
As these changes go into place, make sure you’re aware of how those changes might impact your place of employment or retirement funds. Keep an eye on any potential new programs or opportunities for savings over the next couple of years.