With all eyes on the One Big Beautiful Bill Act (OBBBA) this year, it’s easy to overlook the provisions of the SECURE Act 2.0. Updates to the original SECURE Act of 2019 were passed in 2022 and began to impact retirement plans in 2025, with additional Secure Act 2.0 401(k) changes taking effect this year.
Some key takeaways to start:
- Automatic enrollment of employees into new retirement plans is now mandatory for companies with 10 or more employees.
- The new rules increase the age at which retirees must take required minimum distributions from IRA and 401(k) accounts and modify catch-up contributions.
- SECURE Act 2.0 contains over 90 provisions designed to strengthen Americans’ retirement readiness, and many are taking effect in 2025.
Compliance deadlines for specific provisions and amendments extend through December 31, 2026, though good-faith compliance is expected. Complying with and planning around these SECURE Act 2.0 401(k) changes is imperative, and there are plenty of opportunities for businesses to structure retirement plans that attract top talent.
If you’re a business owner and your current CPA isn’t talking to you about this, they’re not doing their job. Read my recent article about how legacy CPAs are killing growth. You may find that it’s time to make a change. Let’s review the reasons why on a point-by-point basis.
Automatic enrollment will be mandatory for new plans.
Offering a retirement plan to your employees can help land top talent. It’s also a high cost for your business. This year, if you established a 401(k) or 403(b) plan after December 29, 2022, you must include automatic enrollment features with an initial employee contribution default rate between 3% and 10% of compensation.
Who is exempt from the mandate?
- Plans established before December 29, 2022
- Businesses with 10 or fewer employees
- Companies operating for less than three years
- Church and governmental plans
According to industry data, automatic enrollment is used in 47.1% of all U.S. plans, but adoption varies significantly by plan size: only 14.5% of plans under $5 million in assets use the feature, compared to 75.6% of plans with over $1 billion in assets. The consequences of noncompliance with the new rules could be costly for small businesses.
Enhanced catch-up contribution levels will apply for employees aged 60–63.
Employees over fifty can already contribute up to an additional $7,500 annually over the 2025 maximum contribution level of $23,500 to defined contribution plans. After age 60, employees can increase their contributions by up to $10,000 per year.
Here are the numbers:
- Standard 401(k) contribution limit for 2025: $23,500
- Super catch-up for ages 60–63: $10,000
- Total possible contribution: $33,500
The result is a strategic four-year window for employees to accelerate retirement savings before reverting to standard limits at age 64.
Business owners may want to modify their match rules to adjust for this. For instance, a “100% match” should have an “up to clause” to control costs; the clause should apply to cash and corporate stock matches.
High earners will see both upsides and downsides under the Roth catch-up mandate.
The Roth catch-up provision of the SECURE Act 2.0 goes into effect in 2026. It states that employees over 50 who made more than $145,000 in FICA wages in 2025 will be subject to income tax on catch-up contributions to 401(k) plans. In other words, those funds will be treated as Roth 401(k) contributions that grow tax-free and can be withdrawn tax-free.
Here are the changes we’ll see with the Roth catch-up:
- Loss of immediate tax deductions on catch-up contributions
- Tax-free growth in Roth 401(k)s
- Tax-free withdrawals in retirement
- No required minimum distributions on Roth 401(k) balances
Individuals in higher income tax brackets will see the elimination of a tax deduction they have counted on in years past.
Here’s the upside: There’s no required minimum distribution (RMD) rule for Roth accounts, which means contributors can enjoy tax-free growth in the Roth 401(k) portion of their retirement savings for longer periods.
Long-term part-time employee eligibility has expanded.
SECURE 2.0 reduces the service requirement for long-term part-time employees from three years to two consecutive years, effective for plan years beginning after December 31, 2024. The rule also now applies to 403(b) plans, not just 401(k)s.
Expect administrative burdens and, in turn, the overall cost of maintaining the plan to increase.
Business owners must take the following steps to stay in compliance:
- Track hours for all part-time and seasonal employees.
- Identify employees who work 500+ hours for two consecutive years.
- Enroll eligible employees on the next normal entry date.
- Update plan documents by 2026.
Including long-term part-time employees in retirement plans can make more employees eligible for company matches or profit-sharing contributions, and earlier eligibility can lead to an uptick in participants and contributions.
Combined with mandatory automatic enrollment, the number of workers on your retirement plan could multiply quickly.
Secure Act 2.0 401(k) changes to minimum age distribution requirements are on the horizon.
In 2025, the age at which employees must begin taking minimum distributions from their defined contribution plans, e.g., 401(k) and 403(b), was raised to 73.
- Current (2025): Age 73
- Starting 2033: Age 75
In 2033, the age of retirement increases to age 75—a response to people living and working longer.
Roth 401(k) accounts are no longer subject to required minimum distributions starting in 2024, aligning them with Roth IRA rules.
Now, we’re seeing Roth 401(k)s become even more attractive from an estate planning perspective. There’s also an “inheritor” clause in this rule that affects beneficiaries subject to the 10-year rule. Contact my office to learn more about the tax implications.
Student loan payment matching is a lever to attract fresh talent.
Does your company offer education benefits to your employees? In 2024, employers gained the ability to match employee student loan payments with retirement plan contributions.
In other words, qualified student loan payments count as elective deferrals for matching purposes—that’s a huge incentive for your workers to pursue their education and helps them balance debt repayment with retirement savings.
If you’re an employer, student loan payment matching is a powerful tool for attracting and retaining talent that should be explored seriously. Call my office if you have additional questions about this. My team will be happy to help you out.
Here are five steps business owners need to take now.
SECURE 2.0 is one of the most comprehensive retirement reforms we’ve seen in years. The authors of the bill clearly wanted to remove barriers to retirement savings, increase access to retirement accounts, and provide more diverse choices to employees and employers.
I recommend taking the following steps now, or if you have already begun the process of compliance and planning, revisit them:
- Determine whether automatic enrollment applies to your plan.
- Update payroll systems for enhanced catch-ups and Roth requirements.
- Track hours for all part-time employees.
- Consider optional provisions such as student loan payment matching.
- Review and amend your plan documents by December 31, 2026.
Instead of viewing these changes as administrative burdens, business owners should encourage leadership to frame them as employee retention. Be sure to communicate to employees that retirement outcomes are getting a net boost.
To effectively comply with the SECURE Act 2.0 changes, professional help is necessary.
All in all, there are over 90 provisions in SECURE 2.0 with different effective dates, creating a maze of requirements and opportunities. And if we combine SECURE 2.0 with broader changes under the OBBBA, we’re looking at an enormous amount of new information.
Noncompliance with any of these mandates could trigger fines, penalties, or major payment obligations to existing retirement plans. There’s simply not enough time in the day for business owners to make sense of it.
Schedule a discovery call today, and we’ll get ahead of the curve.
Talk soon,
Jeremy A. Johnson, CPA