
The American retirement landscape has changed significantly in the past few years. First, the passage of the SECURE Act (Setting Every Community Up for Retirement Enhancement) in 2019 made significant changes to large sections of the Internal Revenue Code. Major changes included:
- Increasing the required minimum distribution age from 70.5 to 72
- Eliminating the “stretch IRA” (a provision which let non-spouses take required minimum distributions (RMDs) from an inherited IRA over their own lifetimes) and replacement with a 10-year rule (for most but not all beneficiaries)
- Expanding to 529 plans
- Expanding annuity options in 401k plans
Second, the passage of the SECURE ACT 2.0 in the final days 2022 made additional changes. Since we last wrote about the act in 2023, The SECURE Act 2.0 and Retirement – Sensible Financial Planning, many of the proposed changes have become law or are in the process of becoming so. Furthermore, some proposed changes have been delayed or modified. Given the potential impact of these changes to our clients’ finances, I’ve decided to summarize the most important SECURE ACT 2.0 changes here. I have broken this article into sections, treating retirement issues first and non-retirement issues second.
Modifications to Required Minimum Distributions (RMDs)
When owners of pre-tax retirement accounts reach a certain age, they must begin taking RMDs. Each year’s distribution amount is based on two factors: the owner’s age and the account balance as of the end of the prior year.
For example, a 75-year-old with a $1,000,000 IRA balance as of the end of 2024 has an RMD requirement of $40,650. We calculate this requirement by dividing $1,000,000 by the owner’s life expectancy factor, which for a 75-year-old is 24.6.
The first SECURE Act increased the RMD age from 70 ½ to 72. The SECURE Act 2.0 made further changes. The first change was to increase the RMD age to 73 starting in 2023. The act makes an additional change that goes into effect in 2030, increasing the RMD age to 75.
How does this impact you? If you turn 73 between now and 2030, you must plan to take RMDs from eligible accounts including pretax IRAs and most employer retirement plans, e.g. 401(k) plans, 403(b) plans, and profit-sharing plans. The increase in RMD age may also create planning opportunities. While the higher RMD age allows people to continue to defer taxation on withdrawals, that may not always be the most sensible decision. Rather, it may be beneficial to take early distributions to realize income in a lower tax bracket. Some clients in this situation choose to take IRA withdrawals prior to turning 73. For others a Roth conversion may be a better option. If you have questions about your situation, contact your advisor.
Changes to Retirement Contributions
The amount that someone can save into tax-advantaged retirement accounts is limited by the IRS. “Tax-advantaged” accounts let the owner either delay taxation of contributions until sometime in the future or pay taxes today in exchange for tax-free growth.
As of 2025, the annual IRS contribution limits for the most common retirement accounts are:

In addition to the standard limits, individuals who are 50 and over in 2025 can make catch-up contributions. The catch-up contribution limits are:

This means that a 50-year-old could contribute as much as $31,000 ($23,500 + $7,500) to an employer retirement plan or $8,000 ($7,000 + $1,000) to an IRA in 2025.
The SECURE Act 2.0 makes two important changes to these limits.
One. It’s a bird! It’s a plane! No, it’s a ‘super catch-up contribution’!
The law creates a new category of super catch-up contributions for eligible workers. Effective 2025, individuals who are between 60 and 63 years old as of December 31st may be able to increase their catch-up contribution from the standard $7,500 to $11,250. This provision increases total tax advantaged savings by $3,750.
For example, a 61-year-old in 2025 could contribute as much as $34,750 ($23,500 + the ‘super’ catch-up contribution of $11,250) to their company’s 401(k).
Individuals must be participants in a covered plan, including most 401(k), 403(b) and 457 plans. Additionally, their employer must choose to implement this feature as part of their retirement plan. Unlike the standard age 50 catch-up (see above), which is mandatory for most employer plans, this new provision is optional for plan sponsors.
How does this impact you?
The higher limit is a fairly small tax benefit, and the affected class of savers is narrow. Why does a 63-year-old in 2025 benefit from a higher tax deferral but when they turn 64 next year lose the benefit? No idea. That’s Congress. However, if you participate in an employer sponsored retirement plan in 2025 and are between 60 and 63 this year, you should check with your employer and, if allowed, consider increasing your elective deferral amount to take advantage of the higher contribution limit.
Two. IRA catch-up contributions indexed to inflation.
Contribution limits for retirement plans generally increase over time. The thinking is this: as prices of goods and services (inflation) increase over time, so should the amount that people save for retirement.
Starting in 2025, the IRA catch-up contribution (currently $1,000) will be indexed to inflation to the nearest $100. In the past, the IRS made these adjustments on an ad-hoc basis.
How does this impact you?
This change is so small, I questioned whether to include it in this list. If you are 50 or older and make regular IRA savings, you can expect your overall saving limit to more regularly increase over time (the IRA catch-up contribution amount last increased from $500 to $1,000 in 2007).
Mandatory Roth Catch-up Contributions for High Earners
Originally planned to go into effect in 2024, the IRS announced a two-year administrative transition period to implement this new rule. If all goes according to the new plan, starting in 2026 employee catch-up contributions for certain high earners must be Roth contributions.
Recall that age 50 and older participants in 401(k), 403(b) and 457(b) plans can make special “catch-up” contributions ($7,500 in 2025). In 2026 any employees who earned more than $145,000 in prior-year FICA wages from the employer sponsoring the plan wishing to make catch-up contributions must make them as after-tax, or Roth contributions. An affected employee could still make the standard $23,500 plan contribution on a pretax basis. But their next $7,500 would have to be made into a Roth account. The important point here is that affected employees will have additional taxable income in the amount of their Roth catch-up contributions going forward.
How does this impact you?
This is an administratively difficult rule to implement. The IRS could still decide to make changes, but if you are over 50 and making catch-up contributions be aware that starting next year it is very likely your taxable income will increase because of this rule change.
Roth Employer Plan Optional Match
Implemented in 2024, this new rule is optional and allows employers to make matching contributions to Roth accounts.
Prior to this rule, all employer matching contributions were pre-tax. Say you work for a company and your employer makes a $5,000 matching contribution to your 401(k) account. Whether you contribute to a traditional 401(k) or a Roth 401(k), prior to 2024 the employer could only match in the form of a pre-tax contribution. Now, employers have the option of matching to either a pre-tax or a Roth account.
How does this impact you?
The answer today is probably “not at all.” Few employers have implemented this rule as managing employer retirement plans is already administratively complex. However, if your employer does offer the option you need to consider the tradeoffs. Choosing Roth matching contributions will mean higher taxable income today for the benefit of future tax-free growth. Continuing with pretax matches allows you to defer taxes on those wages until some future date, perhaps when you are in a lower tax bracket. Consider asking your advisor to run a scenario comparing the two to get a better understanding of the impact on your lifetime finances.
Student Loan Payment Matching
Young professionals starting their careers often face a difficult decision in terms of savings. Should I save for retirement? Should I pay down my student loans? Do I put aside money to save for a house?
The SECURE ACT 2.0 offers young professionals some relief when it comes to balancing these competing goals. Implemented in 2024, the law gives employers the option to make matching contributions to a retirement plan when an employee makes qualified student loan payments.
Here is how retirement plan matches typically work. To incentivize retirement savings, employers promise to match a certain percentage of employee retirement savings. One common matching formula is this: 50% of every $1 contribution up to 6% of earnings. Say a person makes $100,000 and makes the maximum 401k contribution or $23,500. Their employer will make a matching contribution of 50% of their dollar contributions up to a maximum of 6% of their salary. Or as a formula:
50% X (employee contribution) up to a maximum of 6% X (employee earnings)
In the above example, the employer would make a matching contribution of $6,000 to their employee’s 401k plan (50% x $23,500 is $11,750 but it is subject to the maximum of 6% of earnings or $6,000).
Many young professionals find it difficult to maximize their retirement savings. All else equal, they should probably contribute at least 6% of their salary to get the employer match “free money”.
With the new change in the SECURE ACT 2.0, young workers no longer need to choose between paying off student loans or making 401k contributions (and getting that valuable match). If the plan allows, they can pay off student loan debt, and employers can decide to make a matching contribution as if the employee were contributing to their 401k.
How does this impact you?
If you have student loans and your employer offers this benefit, you should carefully consider your options. While the provision, like everything else in the SECURE ACT, is subject to specific rules, it is potentially quite valuable. If you are interviewing, ask your potential employer about this option and weigh the benefit when it comes time to making an employment decision.
Long-term Care Insurance Premiums
Starting in 2026, individuals can pay up to $2,500 per year from their retirement accounts toward long-term care insurance premiums.
Here is how the rule works. Ordinarily, individuals who take distributions prior to age 59.5 face a 10% early withdrawal penalty. The new rule allows individuals younger than 59.5 to use up to $2,500, penalty free, toward long-term care insurance premiums. The distributions are still subject to ordinary income tax and the policy must qualify as a “high quality coverage” policy (what Congress means by “high quality coverage” they have yet to fully explain).
How does this impact you?
The benefit here is likely to be very small. While the law does offer relief in the form of an exception to the 10% early withdrawal penalty from retirement accounts, it remains unclear how many people would choose to pay premiums out of retirement accounts (giving up tax-deferred growth) and what long-term care insurance policies will be eligible for the carveout.
529 Plan to Roth IRA Conversion Option
529 plans are very popular college savings accounts. Parents, grandparents, and others put money into these special savings accounts where it is invested. The account grows tax-deferred, and distributions are tax-free if used for “qualified education expenses”. (More information here).
One issue with 529 plans is that if the funds are not used for qualified expenses, any gains in the account will be subject to ordinary income tax plus a 10% penalty. You can see the problem. Not knowing how much college may cost in the future could incentivize people to under-save today to avoid future taxes and penalties.
The SECURE ACT 2.0 adds a new rule effective in 2026 to alleviate this problem. Going forward, the 529 plan’s beneficiary can rollover up to $35,000 in an unused 529 balance into a Roth IRA.
For example, assume Darren graduates college with exactly $35,000 left in his 529 plan. Subject to some rules (more below), he can rollover up to $7,000 (the 2025 IRA contribution limit) into a Roth IRA every year for the next five years. The Roth IRA will grow tax free for his life and can be used after age 59.5 tax and penalty free, for any purpose.
To take advantage of this benefit, the following rules apply:
- The 529 account must be open for at least 15 years before you can make a rollover.
- 529 contributions made within the prior five years (including earnings) are ineligible for rollover.
- The beneficiary owner (usually a child or grandchild) must have earned income at least equal to the amount of the rollover (as of 2025 the annual rollover limit is $7,000).
How does this impact you?
If you have a child or a grandchild and a sufficiently long timeframe, this new law is a nice way to help that person get started on their retirement savings. Due to the holding period rules (account must be opened for 15 years; contributions within the prior 5 years are ineligible for rollover), taking advantage of this rule requires advance planning. But if that is your situation, this is a very interesting potential benefit.
As with any financial regulations or vehicles, ask your financial advisor if you have specific questions.
Photo by Joshua Woods on Unsplash