Key SECURE 2.0 Provisions Effective in 2025

Sep 5, 2024 | Articles

2020 How the SECURE Act is Changing RetirementThe SECURE 2.0 Act of 2022 introduces several provisions designed to boost retirement savings. SECURE 2.0 modifies the original RMD and LTPT provisions while introducing new rules.

 

Here are some notable changes taking effect in 2025:

  • Automatic Enrollment Expansion: Generally, 401(k) and 403(b) plans adopted after December 29, 2022 must automatically enroll employees at a rate of 3%–10%, with automatic yearly increases until reaching 10%–15%. (Exemptions may apply.)
  • Increased Catch-up Limits: For those aged 60–63, catch-up contributions will increase to the greater of $10,000 or 50% more than the standard limit. For example, a 60-year-old in 2025 could contribute an extra $11,250 if the regular catch-up limit stays at $7,500.
  • Long-term Part-time Employee Eligibility: The eligibility requirement for part-time employees to participate in 401(k) plans is reduced from three to two years, and it extends to 403(b) plans.
  • Retirement Savings Lost and Found: The Department of Labor will create a national online database to help individuals locate their retirement savings from previous employers.
  • Automatic Portability: This provision allows retirement savings to be automatically transferred from a default IRA to a new employer’s plan, reducing the risk of losing assets when changing jobs.

These provisions are part of a broader effort to close the retirement savings gap and make it easier for employees to save. Studies show that employees are significantly more likely to save when enrolled automatically in an employer-sponsored plan.

Tags

Have questions how this information applies to your situation?

Reach out us. We’re here to help.