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SECURE 2.0 Act: What Workers Need to Know About Retirement Savings

Remember when the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into law December 20th, 2019? SECURE Act was designed to make saving for retirement easier. Lawmakers recently passed legislation on December 29th, 2022, that included the Securing a Strong Retirement Act of 2022, or SECURE 2.0 Act.

Good news! This new legislation is intended to make saving for retirement even easier than before! While not all the changes will be in effect immediately, the bill is designed to encourage retirement savings and facilitate access on withdraws from retirement savings plans.

Read on for a summary of key changes. Reach out to a CFP® Professional to help you plan for how you can take advantage of these new SECURE Act 2.0 provisions.

Highlights of SECURE 2.0 Act for younger workers

401k & employer sponsored retirement plan incentives & contributions

Incentives to contribute. Starting in 2023, employers are allowed to offer small financial incentives to help increase employee participation in their employer sponsored retirement plan.

Benefit for those paying off student loans. Starting in 2024, employers will be allowed to make qualified retirement plan contributions for employees who are not making contributions but are making qualified student loan payments.

Automatic enrollment. Starting in 2025, 401k and 403b plans will be required to automatically enroll eligible participants, with some exceptions for small businesses. Automatic enrollment contributions start with contributions of at least 3%, increasing annually by 1% until reaching at least 10%, but no more than 15%. Employees may opt out of auto enrollment and/or auto escalations.

Part-time employees’ eligibility. SECURE 2.0 builds on the first SECURE Act incentives for part-time employees to participate in employer’s 401k or 403b plans. Part-time employees with 2 consecutive years of service of 500 hours are eligible to contribute.


Emergency withdraws allowed. Starting in 2024, individuals can make a penalty-free distribution of up to $1,000 once per year from their qualified plan. This distribution will not be subject to the 10% tax penalty that applies to early distributions. The emergency distribution may be repaid within three years. If the distribution has not been repaid, you may not take another penalty-free emergency distribution within three years of the original emergency distribution.

Highlights of SECURE 2.0 Act for older workers & retirees


Catch-up contributions increased. Starting in 2025, people can make additional contributions or the greater of $10,000 or 50% more than the regular catch-up contribution to their qualified retirement plans in the years in which that taxpayer attains ages 60, 61, 62, and 63. After 2025, the catch-up contribution amounts will be indexed for inflation. Starting in 2024, individual retirement accounts (IRAs) catch-up contributions will be indexed for inflation in $100 increments.

Note for those who earn more than $145,000 annually (index for inflation), starting 2024, all catch-up contributions to qualified retirement plans will be treated as Roth contributions.

Contributions increased for qualified longevity annuity contracts (QLAC). Effective for QLACs purchased or exchanged on or after December 29, 2022, contributions limits are increased from $145,000 (2022 limits) to $200,000. The bill also removed requirement that contributions are limited to 25% of an individual’s IRA balance.

New Roth contribution capabilities. Starting in 2023, Roth contributions can be made to SIMPLE IRA and Simplified Employee Pension (SEP) IRA plans. Also, employer match contributions in a qualified retirement plan can be made to a Roth account.

Distributions. RMDs (Required Minimum Distributions), QCDs (Qualified Charitable Distributions), 529s

No Required Minimum Distributions for Roth accounts inside of qualified retirement plans. Previously, employees had to rollover their Roth accounts inside of 401k, 403b, and/or 457 plans into a Roth IRA to avoid RMDs on those dollars. Now qualified Roth accounts are no longer subject to RMD requirements and employees can continue to keep their contributions and any earnings inside of their employer’s plan.

Required Beginning Date (RBD) age raised. Starting 2023, the RBD age is 73 for those turning 72 during 2023 or later. Starting in 2033, RMD age will increase to 75 for those turning 74 during 2033 or later. Note that there’s currently a drafting error for those born in 1959 – they meet both 73 and 75 categories. Hopefully this will be resolved in future legislation; however, we do not know what that looks like right now.

More flexible Qualified Charitable Distributions. Starting in 2024, QCDs will be allowed a one-time $50,000 distribution to certain split-interest giving trusts. Ongoing, the $100,000 annual IRA QCD distribution limit will be indexed for inflation.

Ability to convert 529 into Roth IRA. Starting in 2024, owners of 529 (education savings) accounts can make a tax- and penalty-free rollover into the account beneficiary’s Roth IRA. Transfers are limited to $35,000 over the beneficiary’s lifetime and subject to annual Roth contribution limits. The 529 plan must have been in effect for 15 years or more.

These are highlights of some, but not all, of the new provisions in SECURE 2.0 and is not tax advice. For further guidance on this new legislation and to address concerns specific to your situation, it’s a good idea to consult with tax advisors or speak to a CFP® Professional.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.  LeTian Dong is an insurance agent with NM.  Investment brokerage services are offered through Northwestern Mutual Investment Services, LLC, (NMIS) a subsidiary of NM, broker-dealer, registered investment advisor, and member FINRA and SIPC. Investment advisory and trust services are offered through Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, a subsidiary of NM and a federal savings bank. LeTian Dong is a Registered Representative of NMIS.  Representative of NMWMC.

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