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The SECURE ACT 2.0 – Changes You Need to Be Aware Of

Updated: May 8, 2023

The SECURE ACT 2.0 brings significant changes to retirement plans and retirement planning for American businesses and individuals. This blog will outline some of the major provisions that we think you need to be aware of, either as a business owner or as an employee.

For Employers

  • Tax credits for 401(k) startup costs will increase from 50% to 100% for small business owners (50 employees or fewer). The startup limit cost is capped at $16,500. Effective January 1, 2023.

  • In addition to the credits for startup costs, an employer will receive Employer Contribution Credits of up to $1,000 per employee in the year the plan was established. Following the initial year, the Employer Contribution Credits would fall by 25% each subsequent year until it is no longer applicable in Year 5. Effective January 1, 2023.

  • Part time workers only need two consecutive years (previously three years) of 500 or more hours to qualify for retirement plan participation. This amounts to approximately a 10 hour workweek. Effective for new initial plan years beginning on January 1, 2025 or later.

  • Employers must automatically enroll individuals in a workplace retirement plan. The automatic minimum contribution rate will begin at 3%. Employees will have to manually opt out should they not want to participate in their workplace’s retirement plan. Effective January 1, 2025

  • Employers can choose to match an employee who is currently paying off student debt. While the money the employee pays goes towards paying off student debt, the employer contribution will not go towards paying off the student debt, but rather into a workplace retirement account. In Effect.

  • A Roth option will now be available for SIMPLE and SEP IRAs. In Effect.

For Employees

  • The age for Required Minimum Distributions (RMDs) will increase from 72 to 73 for individuals starting on January 1st, 2023. The RMD limit will further increase to age 75 starting on January 1st, 2033. In Effect.

  • RMDs are no longer required from Roth 401(k)s or Roth 403(b)s. Effective January 1, 2024.

  • Penalties for missed RMDs decrease from 50% to 25%. If the mistake is corrected in a timely manner, then the penalty decreases from 25% to 10%. In Effect.

  • Catch up contributions after age 50 will now increase annually, indexed by inflation data. Effective January 1, 2024.

  • Increased catch up contributions allowed at ages 60-63. Effective January 1, 2025.

  • Unused 529 plan funds may now be rolled over tax and penalty free to a Roth IRA. Some restrictions apply, such as the 529 account needs to have been opened over 15 years ago, total annual rollover cannot exceed maximum annual contribution limits for a Roth IRA ($6,500 for 2023), and a lifetime maximum rollover of $35,000. Effective January 1, 2024.

  • Matching contributions can now be applied to Roth 401(k)s. In Effect.


This blog outlined some of the key provision of the SECURE ACT 2.0. There are many more provisions throughout the Act that could apply to you, such as emergency access to retirement accounts, changes to ABLE accounts, inheriting IRAs, and more. If you are an employer or employee that would like your retirement plan assessed, do not hesitate to reach out to one of our trusted advisers.

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