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SECURE 2.0 Act:

How Retirement Planning Improves
More Americans can save for retirement at all stages of their careers

President Biden signed the SECURE 2.0 Act into law on December 29, 2022. The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 covers many changes to retirement provisions aimed at increasing retirement savings, facilitating access to those savings, and lowering employers’ costs in providing retirement savings plans.

The Act promises to increase tax-efficient retirement savings and charitable donations for individuals. Here are some of the highlights:


Many of these changes revolve around what employers are required to offer their employees. Beginning in 2025:

  • Employers with more than 10 employees who offer a 401(k) or 403(b) plan must provide automatic enrollment for new employees (with at least 3% of their salary being deferred) and automatically increase the percentage of their salary that goes into the plan by 1% per year (up to 10%-15%).
  • The employee may still opt out of this if they wish.
  • Part-time employees will also be eligible to participate in their employer’s plans under the new law.

The legislation also provides incentives for small businesses interested in helping their employees save for retirement. For employers with no retirement plan, SECURE 2.0 creates an option for a starter 401(K) that isn’t subject to many of the typical restrictions and requirements such as employer contributions.

  • If you have 50 or fewer qualifying employees and start a plan in 2023, the bill creates a 100% tax credit for administrative costs up to $5,000.
  • Additionally, there is a 100% credit for the first $1,000 contributed by the employer for every employee earning less than $100,000.
  • Those with 51-100 employees qualify for a similar, but lesser, credit.

A sole proprietor who is the only employee of their business can now make deferrals to a 401(k) up to the due date of their tax return in the first year of their plan. Those with SEP (Simplified Employee Pension) or SIMPLE (Savings Incentive Match Plan for Employees) plans are also now eligible to make Roth contributions.

Employers will also be permitted to add a provision to their plans to create an emergency savings account, which is not part of their retirement funds, for non-highly compensated employees. The funds are separately accounted for and are withdrawn at the discretion of the employee. The account balance is generally limited to $2,500.


SECURE 2.0 extended the starting age for RMDs (required minimum distributions) from retirement accounts:

  • Those turning 72 during 2023 or later will now start their RMD at age 73.
  • Those turning 74 in 2033 or later will start at 75.

Many of you may be familiar with the “catch-up” contribution you are allowed to make on top of your normal 401(k) deferral limits after age 50. Currently it’s limited to $6,500 annually. Beginning in 2025, those age 60-63 will have an elevated limit of $10,000.

Beginning in 2024, an employee’s student loan debt repayment can be treated as their contribution to their employer’s 401(k) or 403(b) plan. What this means is that employer matching contributions can now go toward paying down the loan debt instead of retirement savings.

The §529 Plan

The new law also provides an opportunity for education savings to be converted to retirement savings. Some of you may have invested in §529 plans for your children or grandchildren that allow your savings to grow tax free so long as the funds are used for education expenses. The funds in these accounts often turn out to be more than enough to cover scholarly expenses.

  • In 2024, owners of 529 plans that have been in effect for at least 15 years will be able to transfer these funds to a Roth IRA, up to the annual limit for such a contribution for a maximum of $35,000.

These changes are big news for retirement planning for making it easier for small businesses to set up retirement plans for employees. Give us a call and let’s meet to discuss your questions and retirement ideas!

Schell & Hogan, LLP works with individuals and businesses throughout Southeast Georgia and North Florida. Our 56 years in business and collective expertise ranges from tax management and accounting services to more in-depth services, such as audits, financial statements, and financial planning.