What is the SECURE 2.0 Act?
Congress passed the SECURE 2.0 Act of 2022 as part of a larger year-end spending package, the Consolidated Appropriations Act of 2023, enacted on December 29, 2022. It builds on the original SECURE Act from 2019 and reshapes several of the rules that govern how Americans save for retirement and draw that money down later.
The law is actually a merger of three bills that had been moving through Congress separately: the Securing a Strong Retirement Act, cleared by the House on a 414-5 vote back in March 2022, the RISE & SHINE Act, and the EARN Act. Lawmakers folded pieces of all three into the version that eventually became law.
Five areas SECURE 2.0 changed the most
Wider access to retirement plans
A central goal of the law is getting more workers, especially lower and middle earners, into a plan in the first place. It adds tax credits and lighter paperwork requirements to make starting a plan more attractive to small employers.
Starting in 2024, employers can also layer an emergency savings feature onto a defined contribution plan, structured as a Roth account. Workers who fall below the highly compensated threshold can set aside as much as $2,500 a year, or a smaller cap the employer chooses, and can pull the first four withdrawals in a given year free of both tax and penalty. Depending on the plan's rules, an employer match may also apply, giving workers a reason to build a cushion for a surprise expense instead of tapping a 401(k) for it.
Automatic enrollment and escalation
Once this rule takes effect on January 1, 2025, 401(k) and 403(b) plans established after the law's enactment must automatically enroll eligible employees. The starting deferral rate has to sit between 3% and 10%, then climb by 1 percentage point a year until it reaches somewhere between 10% and 15%. Anyone who would rather opt out gets a 90-day window to withdraw whatever was automatically deferred.
Several plan types are exempt: plans that already existed before the law passed, governmental and church plans, employers with 10 or fewer workers, SIMPLE IRA plans, and businesses less than three years old.
A related change lets plan providers offer automatic portability, moving a departing employee's small account balance into their new employer's plan instead of leaving it stranded or, more often, cashed out. That matters because savers with small balances are the ones most likely to cash out early and lose the tax-deferred growth entirely.
More lifetime income options
SECURE 2.0 pushes plan providers to make it easier for savers to convert a balance into guaranteed income. Plans now have to disclose projected lifetime income figures to participants, and the law widened the products available for turning a lump sum into a paycheck.
One concrete change: the amount you can move from an IRA or 401(k) into a Qualified Longevity Annuity Contract, or QLAC, rose to $200,000 starting January 1, 2023, up from the prior $145,000 cap, and the law dropped the old rule limiting QLAC premiums to 25% of your account balance. That dollar figure is indexed and has since moved higher; our QLAC guide has the current limit and walks through how the contract works.
Updated required minimum distribution rules
The age you must start required minimum distributions, or RMDs, moved from 72 to 73 beginning in 2023, so anyone turning 72 that year got an extra year before the clock started. If you had already turned 72 in 2022 or earlier, you stay on the old schedule. The RMD age rises again to 75 starting in 2033.
Missing an RMD used to trigger a 50% excise tax on the shortfall. SECURE 2.0 cut that penalty to 25%, and to 10% if you correct the mistake before an IRS audit or by the end of the second year after it was due, whichever is sooner. Starting in 2024, Roth accounts inside an employer plan, such as a Roth 401(k), no longer generate RMDs at all, matching the treatment Roth IRAs already had. And if an in-plan annuity payment you receive in a given year is larger than your RMD, the excess now counts toward that RMD immediately instead of going to waste.
Other notable provisions
A handful of smaller changes round out the law. Starting in 2024, employers can make matching contributions to a worker's retirement account based on the payments that worker is making toward student loans, a real incentive to keep saving while paying down debt at the same time. Beneficiaries of a 529 education account that has been open at least 15 years can roll up to $35,000 over their lifetime into a Roth IRA, subject to the usual annual Roth contribution limits. And workers between 60 and 63 get a noticeably larger catch-up contribution: the 2026 limit for that age band is $11,250, well above the $8,000 catch-up available to other savers 50 and older.
Anyone weighing how these provisions apply to their own accounts should talk with a tax professional, since several of them interact with income thresholds and filing status in ways a general summary cannot capture.
Who benefits, and how
Individuals
Savers get more ways into a plan, more flexibility once enrolled, and more paths for turning savings into income. Two provisions stand out for people close to retirement.
Qualified charitable distributions, or QCDs, let anyone 70 and a half or older send money directly from an IRA to a qualifying charity, counting it toward that year's RMD without adding it to taxable income. Starting in 2023, the law expanded which charities qualify to include certain charitable remainder unitrusts, charitable remainder annuity trusts and charitable gift annuities, and it indexed the annual QCD ceiling to inflation, which started at $50,000 in 2023 and reached $55,000 for 2026. The catch-up contribution limit for IRA owners 50 and older is now indexed too, moving from a flat $1,000 to $1,100 for 2026. One detail worth knowing: if you earned more than $145,000 (indexed for inflation) the prior year, your catch-up contributions to a workplace plan must go into a Roth account, funded with after-tax dollars.
Employers
Businesses that want to start a retirement plan, or improve one they already sponsor, get new tax credits and less administrative overhead for doing it. The law also makes it simpler to add lifetime income features to a plan, which can help with recruiting and retention in a tight labor market.
Retirement plan providers
Providers benefit indirectly. Automatic enrollment and automatic escalation tend to raise overall plan participation, which grows the assets providers administer and, over time, builds a larger pool of workers with real retirement savings.
What the original SECURE Act changed in 2019
SECURE 2.0 builds on the original SECURE Act, short for Setting Every Community Up for Retirement Enhancement, which became law on December 20, 2019. At the time, no single retirement bill had rewritten this much law since 2006's Pension Protection Act, and knowing what it changed makes the 2.0 updates above easier to follow.
The 2019 law removed the age cap on traditional IRA contributions, so anyone with earned income, or a spouse who has it, can keep contributing no matter their age. It moved the RMD start age from 70 and a half to 72, the rule SECURE 2.0 later pushed to 73 and eventually 75. Qualified charitable distributions still start at 70 and a half, unchanged, but any deductible IRA contribution you make that same year now trims how much you can exclude. Separately, the 2019 law opened a new penalty-free withdrawal for new parents: as much as $5,000 from either an IRA or a workplace plan, usable within a year of a birth or adoption and exempt from the 10% early withdrawal penalty as well as the usual 20% mandatory plan withholding. It also broadened qualified 529 plan expenses to cover apprenticeship program costs and student loan repayment.
The 10-year rule for inherited IRAs
The most consequential change in the 2019 law involved inherited IRAs. If the account owner's death occurred in 2020 or later, most individual beneficiaries must now fully withdraw the inherited balance within 10 years of that death. That replaced the older rule letting most beneficiaries stretch withdrawals across their own life expectancy, sometimes for decades.
Beneficiaries that are not individuals, such as an estate or most trusts, are still held to an older, tighter deadline: a full distribution within five years. A properly structured qualified, or see-through, trust can use the 10-year window instead, and in some cases a see-through trust can still stretch payments if its underlying beneficiary qualifies as an eligible designated beneficiary.
Who can still stretch an inherited IRA
The law carved out five categories of beneficiary who can still take payments over their own lifetime instead of emptying the account in 10 years:
- A surviving spouse, treated the same as under the pre-2020 rules.
- A minor child of the original owner, though only until they reach the age of majority; the 10-year clock then starts.
- A beneficiary with a qualifying disability, generally meaning they cannot engage in substantial gainful work.
- A chronically ill beneficiary, generally meaning they need hands-on help with two or more basic self-care tasks, such as bathing or dressing.
- A beneficiary less than a decade younger than the original owner, such as a sibling close in age.
None of these categories last forever. Once an eligible designated beneficiary dies, whoever inherits from them is limited to the 10-year payout, and the same limit applies to older, grandfathered stretch IRAs once the original stretch beneficiary passes away. For a closer look at which beneficiaries still qualify for lifetime stretch payments, see our guide on inherited IRA rules, and how they interact with an IRA-owned annuity.
When each SECURE 2.0 provision takes effect
December 29, 2022, the date the law was enacted, is the reference point for its effective dates below. Some provisions took effect immediately or retroactively; others phase in as late as 2028. Two abbreviations appear often: PYB means "plan years beginning," and TYB means "taxable years beginning." This table is not exhaustive of every technical provision in the law, but it covers the ones that affect the most savers and plan sponsors, ordered by when they take effect.
| Section | Provision | What changed | Effective |
|---|---|---|---|
| 107 | RMDs: new required beginning date | The required beginning date moves to 73 starting 2023 and to 75 starting 2033, based on birthday: turned 72 before 2023 stays at 72, turns 73 before 2033 uses 73, turns 74 after 2032 uses 75. | 2023 |
| 201 | RMDs: certain life annuities exempted | Lets you satisfy RMDs by buying a fixed annuity with limited features, such as annual increases capped at 5% or a death benefit equal to premiums paid minus payments received. | 2023 |
| 302 | RMDs: lower excise tax | Cuts the penalty for a missed RMD from 50% to 25% of the amount not taken, and to 10% if corrected before an IRS audit or by the end of the second year after it was due. | 2023 |
| 105 | Pooled employer plans: contribution collection | Lets a pooled employer plan name a fiduciary other than a participating employer to collect contributions, using reasonable, diligent, written procedures. | 2023, PYB |
| 106 | 403(b): multiple employer plans | Non-church 403(b) plans may form multiple employer plans, with relief similar to the pooled employer plan rules; governmental plans get relief even without full commonality. | 2023, PYB |
| 113 | 401(k)/403(b): small financial incentives | Employers may offer small incentives not funded by the plan, such as gift cards, to encourage employees to start contributing. | 2023, PYB |
| 312 | Distributions: hardship self-certification | Lets employees self-certify that they meet the conditions for a hardship withdrawal, without submitting separate documentation. | 2023, PYB |
| 317 | 401(k): first-year deferrals for sole proprietors | Allows a sole proprietor who starts a plan to make retroactive elective deferrals for the plan's first year. | 2023, PYB |
| 320 | Notices: reduced requirements for unenrolled participants | Lets plans send limited notices to employees who are not contributing and have no balance, as long as they already received a summary plan description and any required eligibility and annual notices. | 2023, PYB |
| 348 | DB plans: cash balance interest crediting | Allows cash balance plans to use a reasonable projected interest crediting rate for testing, capped at 6%. | 2023, PYB |
| 102 | Tax credit: small employer start-up costs | Raises the start-up credit to 100% of admin costs for employers with 50 or fewer employees, keeps the $5,000 per-employer cap, and adds a new credit covering up to $1,000 of employer contributions per employee, phased out for employers with 51 to 100 employees and unavailable for employees earning over $100,000. | 2023, TYB |
| 112 | Tax credit: military spouse plan eligibility | Gives small employers (under 100 workers) a credit of up to $500 per military spouse for the first 3 years of participation, if the employer offers fast eligibility and vesting. | 2023, TYB |
| 306 | 457(b): governmental plan election timing | Lets participants in governmental 457(b) plans change their contribution election at any time, not just at the start of a month. | 2023, TYB |
| 307 | Distributions: QCD updates | Indexes the $100,000 QCD limit to inflation after 2022 and allows a one-time $50,000 QCD to a charitable remainder trust or gift annuity. | 2023, TYB |
| 322 | IRAs: narrower prohibited transaction penalty | Limits the penalty for a prohibited transaction to the IRA involved, instead of treating all of a person's IRAs as distributed. | 2023, TYB |
| 601 | SIMPLE/SEP: Roth option | Allows SEP and SIMPLE IRAs to be set up as Roth accounts. | 2023, TYB |
| 115 | Distributions: personal emergency withdrawal | Permits one withdrawal a year, up to $1,000, exempt from the 10% early withdrawal penalty, with the option to repay it within 3 years. | 2024 |
| 120 | Distributions: automatic portability | Lets plan service providers automatically move a departing employee's small balance into their new employer's plan. | 2024 |
| 126 | 529 to Roth rollovers | Allows tax and penalty-free rollovers from a 529 account open more than 15 years into the beneficiary's Roth IRA, capped at $35,000 over a lifetime and subject to annual Roth limits. | 2024 |
| 303 | Retirement savings lost and found | Directs the Department of Labor to build a searchable database to help people locate benefits from missing or unresponsive plan sponsors. | 2024 |
| 304 | Distributions: cash-out limit | Raises the automatic cash-out limit for small balances from $5,000 to $7,000. | 2024 |
| 314 | Distributions: domestic abuse victims | Lets plans allow a penalty-free withdrawal for a domestic abuse victim, up to the lesser of $10,000 (indexed) or 50% of the account, with an option to repay it. | 2024 |
| 323 | Distributions: substantially equal periodic payments | Clarifies that a rollover, an annuity exchange, or a switch to an RMD-satisfying annuity does not break a substantially equal periodic payment schedule and trigger the 10% penalty. | 2024 |
| 327 | RMDs: surviving spouse election | Lets a surviving spouse elect to be treated as the deceased employee for RMD purposes. | 2024 |
| 350 | Correction program: elective deferral failures | Creates a safe harbor correction method for certain employee elective deferral failures under existing IRS correction procedures. | 2024, PYB |
| 110 | Student loan matching | Lets employers match student loan payments as if they were elective deferrals, in 401(k), 403(b), SIMPLE and 457(b) plans. | 2024, PYB |
| 121 | Starter 401(k) plans | Lets an employer with no existing plan offer a starter 401(k) or safe harbor 403(b) that defaults every employee into a 3% to 15% deferral rate, with no employer contributions and an annual deferral limit of $6,000 plus a $1,000 catch-up starting at age 50, both indexed after 2024. | 2024, PYB |
| 127 | Pension-linked emergency savings accounts | Lets employers automatically enroll non-highly-compensated employees in a post-tax emergency savings account capped at $2,500, treated as elective deferrals for matching purposes. | 2024, PYB |
| 310 | Top-heavy testing: excludable employees | Lets a plan ignore employees who have not met its minimum age and service requirements when testing whether the plan is top-heavy. | 2024, PYB |
| 315 | Family attribution fix: community property | Disregards community property rules when attributing business ownership between spouses, and stops attributing a minor child's ownership to a parent. | 2024, PYB |
| 315 | Family attribution fix: business aggregation | Allows separating businesses when the only shared ownership link is a parent's ownership attributed to a child. | 2024, PYB |
| 316 | Plan amendments: more time to increase benefits | Lets a sponsor amend a plan to increase benefits retroactively for the prior plan year, as long as the amendment does not raise matching contributions and is adopted by the employer's tax filing deadline. | 2024, PYB |
| 332 | SIMPLE: mid-year conversion to 401(k) | Lets an employer replace a SIMPLE IRA plan with a safe harbor 401(k) plan mid-year, with contribution limits pro-rated for the days each plan was in effect. | 2024, PYB |
| 343 | DB plans: annual funding notice content | Updates what must be included in a defined benefit plan's annual funding notice. | 2024, PYB |
| 349 | DB plans: PBGC variable-rate premium | Stops indexing the PBGC variable-rate premium after 2023, holding it flat at $52 per $1,000 of unfunded vested benefits. | 2024, PYB |
| 602 | 403(b): hardship withdrawal parity | Aligns 403(b) hardship withdrawal rules more closely with the rules that already applied to 401(k) plans. | 2024, PYB |
| 108 | IRAs: catch-up limit indexing | Indexes the $1,000 IRA catch-up contribution limit (age 50 and older) to inflation in $100 increments, based on a 2022 starting point. | 2024, TYB |
| 116 | SIMPLE: additional employer contributions | Lets an employer add extra SIMPLE plan contributions on top of the standard 2% or 3% match, up to the lesser of 10% of pay or $5,000, indexed after 2024. | 2024, TYB |
| 117 | SIMPLE: higher deferral limits | Lets employers with 25 or fewer employees offer deferral limits 10% above the standard SIMPLE limit; employers with 26 to 100 employees can offer the same increase only if they add a 4% match or 3% employer contribution. | 2024, TYB |
| 325 | RMDs: Roth account parity | Removes pre-death RMDs from Roth accounts inside employer plans, matching the treatment Roth IRAs already had. | 2024, TYB |
| 603 | Catch-up contributions must be Roth | Requires catch-up contributions in a 401(k), 403(b) or governmental 457(b) plan to be made as after-tax Roth contributions for anyone who earned more than $145,000 (indexed) the prior year. | 2024, TYB |
| 334 | Distributions: long-term care premiums | Lets a defined contribution plan or IRA distribute up to $2,500 a year (indexed) penalty-free to pay premiums on a qualifying long-term care policy. | 2025 |
| 501 | Plan amendments: SECURE 2.0 conformance deadline | Extends the deadline to formally amend plans for SECURE 2.0 (and earlier SECURE Act and CARES Act provisions) to the end of 2025, or 2027 for governmental plans, as long as the plan already operates as if amended. | 2025, Dec 31 |
| 101 | Automatic enrollment required | Requires new 401(k) and 403(b) plans adopted after December 29, 2022 to automatically enroll participants at 3% to 10%, escalating 1% a year to at least 10% and no more than 15%, with a 90-day opt-out window. Exempts small employers (under 10 employees), new businesses (under 3 years), churches, governments and SIMPLE plans. | 2025, PYB |
| 125 | Long-term part-time worker eligibility | Lowers the service requirement for part-time workers to become eligible for 401(k) elective deferrals to 500 hours a year for 2 consecutive years, down from 3 years under the original SECURE Act, and extends the rule to 403(b) plans. | 2025, PYB |
| 109 | Higher catch-up contributions at ages 60 to 63 | Raises the catch-up contribution limit for workers turning 60 through 63 to the greater of $10,000 or 150% of the regular catch-up limit ($5,000 or 150% for SIMPLE plans), indexed after 2025. | 2025, PYB |
| 338 | Paper statement requirement | Requires at least one quarterly benefit statement a year to be delivered on paper unless the participant opts out, with defined benefit plans required to send one paper statement every 3 years. | 2026, PYB |
| 103 | Not detailed in the available summary | 2027, TYB | |
| 309 | First responder disability payment exclusion | Excludes certain disability payments to first responders from taxable income once they reach retirement age. | 2027, TYB |
| 114 | ESOP sales: S corporation capital gains deferral | Lets an owner of S corporation stock sold to an employee stock ownership plan defer tax on 10% of the resulting long-term capital gain. | 2028 |
| 123 | ESOP: publicly traded securities treatment | Clarifies how certain securities are treated as publicly traded for employee stock ownership plan purposes. | 2028, PYB |
The bottom line
SECURE 2.0 reaches further across the retirement system than any single law has in decades, touching nearly every kind of plan in some way. Between the higher RMD age, the new catch-up contribution rules, the emergency savings option and the inherited IRA rules carried over from the original Act, most households have at least one provision here worth checking against their own accounts. If any of this changes how you should be drawing down savings, converting to Roth, or timing a distribution, a tax professional or a licensed strategist can help you apply it to your own numbers.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Sources
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.