The Setting Every Community Up for Retirement Enhancement Act of 2019 and its 2022 follow-up (also known as SECURE Act 2.0) are designed to help Americans save for retirement. But other benefits have been added along the way that go beyond retirement saving.
Some of these changes went into effect already, others will be implemented in 2026.
While some are mandatory, many are optional. It’s up to employers to determine whether they want to change their plans to offer them.
Let’s take a look at key changes that will be both mandatory and optional next year.
Mandatory changes
These SECURE Act provisions are required for most retirement plans.
Plan participation for part-timers
If you work part time for a company with a 401(k) plan but were never allowed to participate, there may be good news for you in 2025.
If you’ve worked at least 500 hours per year over the past consecutive two years, your employer must allow you to enroll in your plan.
One potential consideration: Your employer doesn’t have to match contributions of part-time employees, so you may want to find out what their policy is, since matches can go a long way toward helping you boost your retirement savings.
Automated enrollment
Starting in 2025, all 401(k) plans established in 2023 or later must automatically enroll eligible employees—including part-timers—with a minimum pre-tax contribution of 3%.
The plan sponsor will determine how your contributions wlll be invested—most likely in a target date fund corresponding to the year you reach full retirement age.
If you were already planning on participating in your plan, consider proactively enrolling when you’re notified of your eligibility. That way, you can have greater control over your contribution rate, whether you want contributions made as pre-tax or after-tax Roth 401(k) contributions, and how your money will be invested.
RMDs for Roth 401(k)s no longer required
In 2024, the IRS waived the requirement for Roth 401(k) accounts to make Required Minimum Distributions, which are normally mandatory when account owners turn 73.
This waiver now makes Roth 401(k)s a more attractive vehicle if you’re willing to forgo the benefits of pre-tax contributions today to enjoy the benefits of taking tax-free withdrawals when you want to—or not at all.
Another benefit: If your children inherit your Roth 401(k) account they’ll never have to pay taxes when they make withdrawals, either, although they will be required to fully deplete the account within ten years of your death.
Optional changes
These are SECURE Act provisions that were already effective in 2024 or will be for the first time in 2025. However, since plan sponsors may have to update their plan documents and their payroll and accounting systems to accommodate them, many might choose not to offer these benefits.
“Super catch-ups”
In 2026 most plan participants over age 50 will be able to make up to $8,000 in additional “catch-up” contributions on top of their standard $23,500 regular contributions.
But if you’re turning 60, 61, 62 or 63 next year, your maximum catch-up contribution limit may rise to $11,250 in 2025, thanks to the SECURE Act’s “super catch-up” provision.
You can split all of these contributions between pre-tax and after-tax Roth 401(k) contributions.
Again, this is an optional benefit that employers don’t have to offer.
“Student loan” matching contributions
In 2024, the SECURE Act began allowing retirement plan sponsors to make matching contributions equal to participants’ qualified student loan payments.
However, participants should know ahead of time that these special matching contributions count as taxable income and must be made to their after-tax Roth 401(k) account.
Employers don’t have to offer this benefit, either. If they do, they must offer it to all eligible plan participants, even part-timers.
Check to see what your plan offers—or plans to offer
Your employer will let you know if and when any of the optional SECURE Act benefits become available. But they may not tell you if they’re weighing the pros and cons of adding them. If any of these features are important to you, consider speaking with your benefits representative to find out what their plans are, and to mention which benefits would be most important to you.
This article was authored by David Jaeger and Jeffrey Briskin. David is a financial advisor with Canby Financial Advisors, a SEC-registered investment adviser. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or training. David can be reached at 508.598.1082 or djaeger@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
©2024 Canby Financial Advisors.