SECURE 2.0 Act, enacted at the end of 2022, revises retirement planning opportunities for taxpayers.

Based on the 2019 Setting Every Community Up for Retirement Enhancement Act (SECURE Act), the law helps individuals better prepare for retirement and saving.

The following is a summary of some key provisions impacting retirement planning in the coming years.

  • The catch-up contribution limit for 401(k) and 403(b) plans is increased to $10,000 annually for employees ages 60 – 63 (age as of December 31) beginning in 2025.
  • The catch-up contribution to a 401(k) or 403(b) plan for an employee with wages in excess of $145,000 the previous year is required to be made as a Roth contribution beginning in 2024.
  • For 401(k) and 403(b) plans that allow Roth contributions, employees that are 100% vested can opt to have their employer matching and other non-elective contributions to their retirement plan be funded as a Roth contribution beginning in 2023.  The employer contributions to an employee’s Roth retirement account will be taxable income to the employee at the time funded.
  • SIMPLE plans will allow a Roth funding component beginning in 2023.
  • SEP-IRAs will allow a Roth funding component beginning in 2023.
  • With regard to “qualified student loan payments” made by employees, employers can make matching contributions to the employees’ 401(k) or 403(b) account with regard to those employee student loan payments (thus treating the loan payments as if they were salary deferrals), subject to limitations, beginning in 2024.

To learn more about the Secure 2.0 Act, the following articles give a great overview: