The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0, signed into law in December 2022, introduced sweeping changes aimed at improving retirement readiness for Americans. As a follow-up to the original SECURE Act of 2019, this new legislation provides greater flexibility, enhanced savings opportunities, and significant tax planning advantages for individuals and small business owners alike.

For clients of Hughes, Snell & Tuscan, understanding how these updates affect your financial goals is key. Below, we break down the key provisions of SECURE 2.0 and what they mean for your retirement strategy in 2025 and beyond.

Key Takeaways of SECURE Act 2.0

1. Delayed Required Minimum Distributions (RMDs)

Previously, retirees had to begin taking RMDs from traditional IRAs and 401(k)s at age 72. Under SECURE 2.0, the age increases to:
– 73 starting January 1, 2023
– 75 starting January 1, 2033

What this means for you: More time for your investments to grow tax-deferred and additional planning opportunities for Roth conversions before RMDs kick in.

2. Automatic Enrollment in Retirement Plans

Beginning in 2025, new 401(k) and 403(b) plans must automatically enroll eligible employees at a minimum contribution rate of 3%, increasing annually to at least 10% (up to a cap of 15%).

Planning tip: Business owners should prepare for compliance while leveraging incentives to attract and retain talent.

3. Higher Catch-Up Contributions

Starting in 2025, individuals aged 60–63 can make catch-up contributions of up to $10,000 (or 50% more than the standard catch-up amount) to employer-sponsored retirement plans.

Tax impact: Those earning over $145,000 must make catch-up contributions on a Roth basis, meaning post-tax dollars.

4. Roth Matching Contributions Allowed

Employers can now offer matching contributions in Roth form for 401(k), 403(b), and 457(b) plans.

Strategy insight: This provides tax-free growth potential and is a strong option for high earners who expect higher taxes in retirement.

5. Student Loan Repayment Matching

Starting in 2024, employers can treat qualified student loan payments as elective deferrals for matching purposes in retirement plans.

Why it matters: Employees repaying loans won’t miss out on retirement plan matching.

6. Emergency Savings Provisions

SECURE 2.0 allows penalty-free emergency withdrawals of up to $1,000 annually. Some plans may also offer an emergency savings account linked to retirement plans.

What to consider: While helpful in emergencies, avoid relying on retirement accounts as a safety net.

7. Saver’s Match Replaces Saver’s Credit

Beginning in 2027, the non-refundable Saver’s Credit will be replaced by a government “match” of up to 50% of contributions (up to $2,000) for lower-income workers.

How SECURE 2.0 Impacts Different Retirement Savers

For Individuals Nearing Retirement (Ages 60–75):
– Delay RMDs to allow for more growth.
– Use the window for Roth conversions.
– Maximize catch-up contributions, especially if income is high.

For Younger Savers (Under 40):
– Take advantage of automatic enrollment and Roth matching.
– Establish good savings habits early to maximize compounding.

For Small Business Owners:
– Review plan design and compliance.
– Consider adopting retirement plans to benefit from tax credits and retain employees.
– Explore Roth matching and student loan provisions to stay competitive.

Tax Planning Opportunities

Roth Conversions:
Use the extended time before RMDs to convert traditional IRA funds to Roth IRAs during lower-income years.

Charitable Giving:
Consider Qualified Charitable Distributions (QCDs) once RMDs begin—these are not taxed and count toward RMDs.

Multi-Year Contribution Strategy:
Plan contributions based on expected income fluctuations to reduce overall taxable income.

Navigating SECURE 2.0 with Expert Guidance

The complexity of SECURE Act 2.0 underscores the importance of personalized planning. At Hughes, Snell & Tuscan, our retirement tax specialists are here to help you:
– Maximize retirement savings under new rules
– Create tax-efficient withdrawal strategies
– Optimize employer-sponsored plans and benefits

Final Thoughts

SECURE 2.0 brings welcome changes to the retirement landscape—but also new challenges. Whether you’re self-employed, nearing retirement, or running a business, proactive tax and financial planning is essential to stay ahead.

Ready to adjust your retirement strategy? Contact Hughes, Snell & Tuscan today for personalized guidance that aligns with your long-term goals.