The SECURE 2.0 Act of 2022 introduced a series of sweeping changes to retirement savings plans in the United States. Many of its most significant provisions will become effective in 2025 and 2026, and they are designed to expand access to retirement plans, increase savings rates, and improve flexibility for both employees and employers.
For business owners, HR professionals, and employees alike, understanding these changes is critical to ensuring compliance and maximizing benefits. Below is a breakdown of key SECURE 2.0 provisions that will take effect through 2026, including what they mean for workplace retirement plans.
Automatic Enrollment (and Auto-Escalation) in New 401(k)/403(b) Plans
Starting with the 2025 plan year, any 401(k) or 403(b) plan established after December 29, 2022, must automatically enroll eligible employees—unless the employee opts out.
- The initial contribution is required to be at least 3% of salary (but no more than 10%), and each year it must increase by 1% until it reaches at least 10% (up to 15%).
- Employees retain the right to opt out or choose a different contribution rate.
- Note: Some small employers (e.g., with 10 or fewer employees) and certain types of plans (e.g., government or church plans) are exempt.
Why this matters: Automatic enrollment has been shown to significantly increase plan participation. By requiring auto-enrollment and annual escalation in new plans, SECURE 2.0 aims to encourage consistent savings habits without requiring employees to take action themselves. For employers starting new plans, this means planning ahead to implement these features by 2025.
Higher Catch-Up Contribution Limits for Ages 60–63
Beginning in 2025, individuals aged 60, 61, 62, or 63 will be eligible for a new, higher catch-up contribution limit in employer-sponsored retirement plans.
- Starting in 2025 (taxable years after December 31, 2024), participants aged 60, 61, 62, or 63 get a higher “super catch-up” limit: the greater of $10,000 or 50% more than the standard catch-up.
- These increased catch-up limits are indexed for inflation after 2025.
Why this matters: This provision is particularly valuable for late-career employees who may need to accelerate their retirement savings. Employers offering plans should update payroll and recordkeeping systems to handle this new contribution category and ensure employees are informed of their eligibility.
Easier Participation for Long-Term Part-Time Workers
One of the most employee-friendly provisions in SECURE 2.0 affects part-time workers, making it easier for them to participate in workplace retirement plans.
- The waiting period for long-term, part-time workers to join 401(k) plans is reduced: under SECURE 2.0, eligible part-time workers must be allowed to participate after 2 years (down from the previous 3-year rule), effective for plan/tax years beginning after December 31, 2024.
Why this matters: In industries where part-time work is common—such as retail, hospitality, and education—this change helps expand retirement plan access. Employers must ensure that their systems and plan documents are updated to reflect the new eligibility timeline.
More Incentive for Small Employers to Offer Plans
SECURE 2.0 introduces greater incentives for small businesses to offer retirement plans, addressing one of the key barriers to plan adoption: cost.
- The tax credit for small employers that start or join a retirement plan has been increased, making it less costly to offer retirement plans.
Why this matters: For small business owners, this provision makes offering a retirement plan more financially viable. Enhanced tax credits can significantly offset administrative and startup costs, helping small employers compete for talent by offering competitive benefits.
Paper Statement Requirement (for Defined-Contribution Plans)
Starting in 2026, plan sponsors of defined-contribution retirement plans must make a shift in how they deliver benefit statements.
- Beginning in 2026, defined-contribution retirement plans generally must provide at least one annual paper benefit statement to participants (unless they elect otherwise).
Why this matters: While many plans have moved to electronic communications, this provision ensures that participants receive at least one physical statement per year. This is especially important for those who prefer tangible documentation or who may not have easy access to online systems. Employers will need to review and potentially update their communication practices to comply.
What Is the “Roth Catch-Up” Rule Under SECURE 2.0?
A major shift is coming for high earners who make catch-up contributions beginning in 2026.
- Under SECURE 2.0, starting January 1, 2026, participants age 50 or older whose prior-year wages from their employer exceed a threshold (currently US$145,000, subject to inflation)—known as “high earners”—must make their catch-up contributions as Roth (after-tax), rather than pre-tax.
- This applies to employer-sponsored plans: 401(k), 403(b), and governmental 457(b) plans.
- That means if you are a high earner in that age bracket, your additional catch-up contributions (on top of the standard contributions) will be made with after-tax dollars: no upfront tax deduction, but distributions in retirement can be tax-free (assuming Roth-distribution rules are met).
Why this matters: This change shifts the tax strategy for older, high-income participants. While Roth contributions don’t reduce taxable income now, they can offer significant tax advantages later. For employers, this provision requires ensuring that their retirement plans include a Roth option and that payroll systems are capable of distinguishing Roth catch-up contributions for high earners.
What This Means for Employers & Employees (2025–2026)
The provisions of SECURE 2.0 set to take effect in 2025 and 2026 offer both challenges and opportunities. Here’s a summary of what these changes could mean:
- If your employer starts a new 401(k) or 403(b) plan now (or soon), many employees will be automatically enrolled unless they opt out, making it more likely that people save.
- Employees aged 60–63 get a newly boosted opportunity to “catch up” more aggressively on their retirement.
- Long-term part-time workers may gain access to retirement plans sooner.
- Small businesses have more favorable incentives to offer retirement plans.
- Plan participants should expect new communication practices, like annual paper statements, starting around 2026.
Final Thoughts
SECURE 2.0 is a powerful step toward strengthening retirement readiness across the workforce. Whether you’re an employer looking to stay compliant or an employee hoping to make the most of your retirement options, the coming changes offer important tools to support long-term financial security.
Employers should work closely with their benefits advisors, third-party administrators, or PEO partners to implement the necessary plan changes and ensure systems are updated in time. Employees should stay informed, review their contribution strategies, and take advantage of the expanded opportunities that SECURE 2.0 provides.
