Key Takeaways
Upgraded provisions of the SECURE Act are designed to help you save more for retirement.
Need to borrow from your retirement? There are now tax-free options available.
Unused 529 education savings can now be rolled into a Roth IRA, turning leftover college funds into retirement savings (with conditions).
What Is the Purpose of the SECURE Act 2.0?
With rising costs and shifting work patterns, many Americans may feel ill-prepared for retirement. The upgraded SECURE Act (version 2.0), passed in December 2022, aims to change that. It builds on the original 2019 law, introducing new rules that give individuals more tools to grow their nest egg.
Curious to know more? This blog breaks down the key updates that apply to individuals.
What Key Provisions of SECURE Act 2.0 Are Relevant to Individuals?
From catch-up contributions to Roth flexibility, the latest changes aim to help you retire with greater control and confidence.
How does it do this?
1. It Increases the Age for Required Minimum Distributions (RMDs)
As of 2023, the RMD age rose from 72 to 73 – and it’s set to increase to 75 by 2033.
This means you’ll have more time to let your retirement funds grow tax-deferred, especially if you don’t need to tap into them early.
2. It Increases Catch-Up Contributions for Older Workers
Feeling a bit behind? If you’re 50 or older, you can now make higher catch-up contributions:
- 401(k)/403(b): Increased from $6,500 to $7,500.
- IRAs: The $1,000 catch-up amount will now be indexed for inflation.
- Ages 60–63: Starting in 2025, contributions can go up to $10,000 (adjusted for inflation).
This means that if you started your savings journey late, these expanded limits will help boost your retirement funds in the final years before leaving the workforce.
3. It Expands Automatic Enrollment in Retirement Plans
As of 2025, new 401(k) and 403(b) plans require that eligible employees be automatically enrolled at a minimum contribution rate of 3%, with the option to increase up to 10%.
This removes the barrier of having to opt in and helps individuals build consistent retirement savings with minimal effort.
4. It Introduces Emergency Savings Accounts
Starting in 2024, SECURE Act 2.0 lets employers offer a pension-linked emergency savings account (PLESA)—an after-tax Roth account that sits alongside your retirement plan and allows you to contribute up to $2,500 per year.
How it works:
- Eligible employees can contribute via payroll deductions.
- You can save up to $2,500 in the account ($2,500 is statutory, though your employer could set a lower limit).
This offers accessible financial access without eating into retirement savings. PLESAs can prevent costly early loans or penalty-heavy withdrawals from your 401(k).
5. It Allows 529 College Savings Plan Rollovers to Roth IRAs
With SECURE 2.0, unused funds in a 529 college savings plan can be rolled over into a Roth IRA for the beneficiary (up to $35,000 over a lifetime) without incurring taxes or penalties.
What to know:
- The 529 must have been open for at least 15 years
- Annual Roth IRA contribution limits still apply ($7,000 for 2025, or $8,000 if the beneficiary is 50 or older)
This offers financial flexibility and a boost to your savings, as it essentially turns unused education savings into retirement funds.
6. It Expands Access to Retirement Plans for More Workers
The upgraded SECURE Act lowers the threshold for part-time employees to access workplace retirement plans. Now, those who work at least 500 hours per year for two consecutive years (this is down from three years previously) must be offered access to employer-sponsored retirement plans.
This change opens the door to retirement savings for millions of part-time workers who were previously left out so that more Americans can build long-term financial security.
7. It Promotes Financial Literacy in the Workplace
The upgraded SECURE Act encourages employers to offer clearer retirement planning tools; like calculators, educational resources, and simplified guidance; to help employees better understand their options.
These tools help you take control of your financial future; because when you’re informed, you’re empowered to make retirement decisions that align with your personal goals.
8. It Expands the Saver’s Credit
The SECURE Act 2.0 expands and simplifies the Saver’s Credit – a tax break for low- to moderate-income individuals who contribute to retirement plans. Instead of just reducing your tax bill, the new law gradually replaces the credit with a federal Saver’s Match, starting in 2027. Under this match, the government contributes directly to your retirement account, based on set criteria and limits. Eligible taxpayers will be able to claim a government match for certain retirement account contributions, with the maximum match being $1,000 per person.
This means that instead of just lowering your taxes, eligible savers will receive actual retirement contributions; which makes the incentive more tangible and helps to close the retirement gap for lower-income earners.
9. It Helps You Save While Paying Off Student Loans
Starting in 2024, employers can opt to match your qualified student loan payments with contributions to your retirement account – just as they would if you were contributing directly to a 401(k) or 403(b).
How it works:
- You continue paying down your student loan.
- If your employer offers this benefit, they treat your loan payments like a retirement contribution for the purposes of matching.
- You must certify those payments annually (but the IRS has designed the process to be simple and flexible.)
This provision means you don’t have to pause saving for retirement while managing student debt. It helps you stay on track financially—without having to split your priorities.
10. It Allows Penalty-Free Emergency Withdrawals
Individuals can now withdraw up to $1,000 per year from retirement savings for emergencies without the usual 10% penalty. This gives you financial flexibility when unexpected expenses arise.
11. It Introduces a “Lost and Found” for Retirement Accounts
The Department of Labor is creating a national database to help individuals locate old or forgotten retirement accounts.
If you’ve changed jobs or moved frequently, you may have retirement savings waiting to be reclaimed – making this especially beneficial.
How to Maximize SECURE Act 2.0 Benefits
- Revisit your retirement strategy for better tax outcomes. Evaluate where you can increase contributions, take advantage of catch-up limits, or shift toward Roth options to optimize your long-term tax position.
- Align short-term savings with long-term goals. Make use of emergency savings accounts, student loan matching, or auto-enrollment plans to strengthen your financial foundation – without sacrificing future growth.
- Partner with an expert who understands the law – and your goals. A retirement strategy isn’t one-size-fits-all. It should reflect your income, age, and personal priorities. Work with an expert that can take your bespoke needs into account and save you money.
Frequently Asked Questions
1. Who benefits most from the SECURE Act 2.0 changes?
Individuals with student loans, lower to moderate incomes, part-time workers, and those closer to retirement age all stand to benefit from the new provisions.
2. Can I access my retirement savings early without penalties?
Yes. Under SECURE 2.0, you can make penalty-free withdrawals of up to $1,000 per year for emergency expenses.
3. What’s the Saver’s Match and how is it different from the Saver’s Credit?
The Saver’s Match is set to replace the Saver’s Credit in 2027. Instead of just lowering your taxes, eligible individuals will receive a government contribution directly into their retirement account – limits apply.
Whether you’re catching up on retirement savings or planning for long-term stability, Fusion CPA can help you to make the most of the SECURE Act 2.0! Contact us today!
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This blog article does not provide legal, accounting, tax, or other professional advice. We base articles on current or proposed tax rules at the time of writing and do not update older posts for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. This website does not provide all-inclusive information, and you should not rely on it as if it does.