The SECURE 2.0 Act is shaking things up for retirees, bringing significant changes to retirement accounts. If you’re wondering how this affects your 401(k), IRA, or even a Roth account, it’s important to understand the new rules that could impact your future. The aim is to encourage more people to save for retirement, but with over 90 provisions in this law, it’s easy to feel overwhelmed.

Here’s a breakdown of the key points you need to know:

Required Minimum Distribution (RMD) Changes

One of the most talked-about changes is to the required minimum distribution (RMD) rules. RMDs are the amounts you’re required to withdraw annually from your retirement accounts once you hit a certain age. Before, the age to start taking RMDs was 72, but SECURE 2.0 pushes it to 73, and eventually to 75. While that might sound great, not everyone can afford to wait. For many retirees, especially those relying on these distributions for living expenses, delaying RMDs could complicate things.

On the flip side, if you don’t need the money right away, delaying RMDs can be a smart tax move. By not withdrawing funds, you let your savings grow tax-deferred a bit longer. But remember, once you start, missing an RMD will result in penalties. The good news? The penalty has been lowered to 25%, and in some cases, as low as 10%.

Additionally, Roth 401(k)s no longer require RMDs. So, if you’ve got a Roth 401(k), you don’t have to worry about taking those mandatory withdrawals anymore, giving you more flexibility in your retirement planning.

Catch-Up Contributions Are Getting a Boost

If you’re 50 or older, you probably know about catch-up contributions, which let you contribute more to your retirement accounts than younger workers. Starting in 2025, SECURE 2.0 increases those limits. If you’re in your early 60s (ages 60-63), you’ll be able to contribute even more—up to $10,000 or 50% more than the standard catch-up amount. This provision helps those nearing retirement who might have fallen behind in saving to add a little extra cushion.

One catch: If you earn more than $145,000 a year, your catch-up contributions must be made on a Roth basis, meaning after taxes. This rule was set to kick in by 2024 but has been delayed until 2026, giving you more time to plan accordingly.

Changes to 401(k) Plans

The SECURE 2.0 Act also includes provisions that directly affect 401(k) plans, many of which aim to increase participation. Starting in 2025, automatic enrollment in 401(k) and 403(b) plans will become mandatory for new employees, unless they opt out. Automatic enrollment has been shown to boost participation rates, which is good news if you’ve been hesitant to contribute or just keep forgetting to sign up.

Employers can now offer small financial incentives—think low-dollar gift cards—to encourage employees to contribute to their retirement plans. This provision went into effect in 2023, so don’t be surprised if you get a little perk for boosting your savings.

Emergency Withdrawals Without Penalties

Starting in 2024, the SECURE 2.0 Act introduces new rules for emergency withdrawals. You’ll be allowed to take out up to $1,000 from your retirement account to cover unexpected expenses without paying the usual 10% penalty for early withdrawal. However, there’s a catch: if you don’t pay it back, you won’t be able to take another emergency withdrawal for three years.

There’s also a provision allowing penalty-free withdrawals in cases of domestic abuse, which could provide some relief to those in challenging situations. These changes aim to give retirees and other account holders more flexibility in dealing with financial emergencies while still encouraging long-term savings.

Student Loan Matching Contributions

For those still grappling with student loans, SECURE 2.0 offers a solution. Beginning in 2024, employers can match your student loan payments with contributions to your retirement account. This provision aims to help those who might otherwise delay saving for retirement because they’re focusing on paying off debt.

529 Plan Rollovers to Roth IRAs

Have a 529 plan you’re no longer using? Starting in 2024, SECURE 2.0 allows for rollovers from a 529 plan to a Roth IRA under certain conditions. If the plan has been around for at least 15 years and meets other specific requirements, you can roll over up to $35,000 over your lifetime, tax-free. This change gives more flexibility to families who saved for education but ended up not needing all the funds.

Retirement “Lost and Found”

One of the lesser-known provisions of SECURE 2.0 is the creation of a national retirement savings “lost and found.” Millions of dollars in retirement savings go unclaimed every year because people lose track of their accounts, especially when switching jobs. The Department of Labor will set up a searchable database to help people find their lost retirement accounts. This feature is expected to be available in the next couple of years, offering a useful tool for those who might have misplaced their retirement savings along the way.

Part-Time Workers Get Access

SECURE 2.0 also expands access to retirement plans for part-time workers. Starting in 2025, employees who work at least 500 hours a year for two consecutive years will become eligible to participate in their employer’s 401(k) plan. This change is a game-changer for people in part-time roles who previously didn’t have the opportunity to save for retirement through their employer.

The Bottom Line

The SECURE 2.0 Act brings many changes that could affect your retirement savings. Whether you’re approaching retirement or already enjoying it, understanding these new rules is key to maximizing your financial future. From delayed RMDs to boosted catch-up contributions and new withdrawal rules, there’s a lot to consider. Take the time to review these provisions and think about how they might fit into your overall retirement strategy.