The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0, enacted in late 2022, contained a long list of provisions that are scheduled to roll out over several years. Here’s a look at how the legislation could affect your retirement savings in 2025.
Larger catch-up contributions for those in their early 60s. Starting in 2025, participants in 401(k) or other employer-provided retirement plans who are ages 60 through 63 can take advantage of a provision allowing them to make a catch-up contribution of up to $10,000 or up to 150 percent of the regular catch-up contribution amount for those 50 and older—whichever is greater.
In 2025, those workers will be allowed to make catch-up contributions of up to $11,250, for a maximum contribution of $34,750. (Savers under 50 will be allowed to stash up to $23,500 in 401(k) and other employee-sponsored plans in 2025, up from $23,000 in 2024. The catch-up contribution for workers 50 and older will be $7,500, for a total of $31,000 in 2025.)
You can direct your contributions to a traditional or a Roth 401(k) plan. While contributions to a Roth 401(k) are made with after-tax dollars, withdrawals are tax-free as long as you’re 59½ or older and have owned the account for at least five years. You can contribute to a Roth 401(k) regardless of your income level. And as of 2024, you’re no longer required to take minimum distributions from your Roth 401(k) plan when you turn 73.
Starting in 2026, workers age 50 and older who earned $145,000 or more in the previous year will be required to funnel catch-up contributions to a Roth 401(k) plan. This provision of SECURE Act 2.0 was originally scheduled to take effect in 2024, but the IRS postponed implementation until 2026 after plan providers and employers—particularly those who don’t yet offer a Roth 401(k)—said they needed more time to prepare.
The maximum you can contribute to a traditional or Roth IRA will remain at $7,000 for 2025, the same as 2024. Workers 50 or older will be able to contribute up to $1,000 in catch-up contributions, unchanged from 2024.
Automatic enrollment. A study by the Vanguard Group, one of the largest 401(k) providers, found that 90 percent of workers who are automatically enrolled in their employer’s retirement plan remain in the plan. Starting in 2025, businesses adopting new 401(k) or 403(b) plans will be required to automatically enroll new employees at a contribution rate of between 3 percent and 10 percent of compensation. They’ll also be required to increase the contribution rate by 1 percent each year, to a maximum of at least 10 percent but no more than 15 percent of compensation. Employees who don’t want to participate will have to opt out of the plan. Businesses with 10 or fewer employees or start-ups that have been in business for less than three years will be excluded from this requirement.
