Starting this year, the SECURE 2.0 Act introduces several important changes that can significantly impact your retirement savings. Here’s what you need to know to make the most of these new provisions:
Automatic enrollment in retirement plans. Beginning this year, new 401(k) and 403(b) plans will automatically enroll eligible employees. This means that if you start a new job or your company starts a new workplace retirement plan, you’ll be automatically enrolled in the plan with a contribution rate of at least 3%, which can increase annually up to 15%. This feature helps ensure that you start saving for retirement right away, even if you don’t take any action.
Higher catch-up contributions. If you’re age 60 to 63, you’ll be able to make higher catch-up contributions to your retirement plan starting this year. The new limit will be the greater of $10,000 or 50% more than the regular catch-up amount. This change is designed to help those nearing retirement age boost their savings.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Improved access for part-time workers. SECURE 2.0 reduces the participation requirement for long-term, part-time workers from three years to two years. This means that if you work part-time for a long period, you’ll be able to participate in your employer’s 401(k) plan sooner, giving you more time to save for retirement.
Retirement savings lost and found. The Department of Labor will create a national online searchable database to help you find lost retirement accounts. This can be particularly useful if you’ve changed jobs multiple times and lost track of your retirement savings.
Automatic portability. This provision makes it easier to transfer your retirement savings from one employer’s plan to another when you change jobs. It helps ensure that your retirement savings stay with you, no matter where you work.
The bottom line
The provisions in SECURE 2.0 create several opportunities to enhance your retirement readiness. Here’s what you can do:
- Take advantage of automatic enrollment and auto-escalation. If your new employer offers these features, they can help you save more effortlessly.
- Maximize catch-up contributions. If you’re eligible, make sure to take full advantage of the higher limits to boost your retirement savings.
- Participate in your employer’s plan. Whether you’re a full-time or part-time worker, contributing to your employer’s retirement plan can significantly impact your future financial security.
- Keep track of your retirement accounts. Use the new lost-and-found database to ensure you don’t lose track of your savings.
- Transfer your savings when you change jobs. Make use of automatic portability to keep your retirement savings intact.
Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.
Franklin Templeton, its affiliated companies, and its employees are not in the business of providing tax or legal advice to taxpayers. Taxpayers should seek advice based on the taxpayer’s particular circumstances from an independent tax adviser.
Related Content
- New SECURE 2.0 Super 401(k) Catch-Up Contribution for Ages 60-63
- SECURE 2.0 Retirement Savings Changes to Know
- New Rules for Retirement Savings Taking Effect in 2025
- Three Changes Coming for Social Security in 2025
- Three Medicare Changes on the Horizon for 2025
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Want To Retire at 55? See If You Can Answer These Five QuestionsWho said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
Want To Retire at 55? See If You Can Answer These Five Questions
Who said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
I'm 57 With $4.1 Million and Plan to Retire Abroad in a Few Years. Can I Stop Contributing to My 401(k)?We ask financial experts for advice.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
The 'Me-First' Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
How to Plan Your First International Trip After RetirementRetirement paves the way for a world of exciting (and intimidating) experiences. An overseas journey can be an ideal way to embrace this new phase of life.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
