Enhanced Retirement Savings Opportunities Under SECURE 2.0
SECURE 2.0 strengthens the U.S. retirement system by expanding contribution opportunities, increasing flexibility for savers, and imposing new compliance obligations. For American taxpayers and employers navigating these rules, working with an experienced U.S. tax attorney is often essential given the growing complexity of retirement-plan governance.
Automatic Enrollment Requirements
A central feature of SECURE 2.0 is the automatic enrollment requirement for new 403(b) and 401(k) plans established after December 31, 2024. These plans must automatically enroll eligible employees at minimum contribution rates starting between 3% and 10%, increasing annually until reaching 10% to 15%. Existing plans are exempt, but employers creating new plans must adjust onboarding processes and payroll and payroll tax systems accordingly. Seasoned U.S. tax lawyers frequently assist plan sponsors with compliance reviews, plan documentation updates, and implementation strategies.
Catch-Up Contribution Changes
For high-income earners—those earning more than $145,000 (indexed)—SECURE 2.0 requires catch-up contributions to be designated as Roth contributions beginning in 2026. Although implementation has been delayed, knowledgeable U.S. tax attorneys are advising clients on the forward tax impact, including the acceleration of taxable income and the long-term benefits of tax-free Roth growth.
Starter 401(k) Plans for Small Employers
SECURE 2.0 introduces “starter 401(k)” plans designed for small employers without existing retirement programs. These simplified arrangements allow employee-only deferrals up to IRA limits. Employers assessing eligibility, tax credits, or transition from informal savings programs should consider guidance from expert U.S. tax lawyers who routinely structure retirement-plan adoption for growing businesses.
Emergency Savings and Special Withdrawals
Plans may now add linked “emergency savings accounts” permitting penalty-free withdrawals up to $1,000 per year. Additional special withdrawal categories—for domestic abuse victims, terminal illness, and federally declared disasters—require careful interpretation. Top U.S. tax lawyers are increasingly involved in reviewing distribution procedures to ensure plan administrators avoid triggering unintended tax liabilities.
Small Employer Tax Credits
Eligible employers may claim up to 100% of administrative costs for the first three years, capped at $5,000 annually, plus an additional credit for employer contributions. Knowledgeable U.S. tax lawyers can help quantify these incentives and compare whether starter 401(k) plans or traditional plans yield greater benefits.
Required Minimum Distribution (RMD) Age Changes
SECURE 2.0 increases the RMD age to 73, with a further increase to 75 beginning in 2033. This change supports extended tax-deferred growth and requires updated withdrawal strategies. Cross-border taxpayers in particular benefit from consulting experienced U.S. tax lawyers who can reconcile RMD rules with foreign reporting and treaty considerations.
Tax Tips for U.S. Taxpayers and Plan Sponsors
- Employers establishing new plans should update payroll systems now to meet the automatic enrollment requirements.
- High earners expecting mandatory Roth catch-ups should model the tax impact well in advance.
- Small business owners should consider whether starter 401(k) arrangements or traditional plans provide a better tax profile.
- Individuals approaching RMD age should confirm new withdrawal schedules to avoid penalties.
Frequently Asked Questions
What is the purpose of SECURE 2.0?
SECURE 2.0 aims to expand retirement coverage, increase savings, and simplify certain retirement-plan rules.
Does SECURE 2.0 require all plans to adopt automatic enrollment?
No. Only new 401(k) and 403(b) plans created after 2024 must comply.
How do Roth catch-up rules affect high earners?
Beginning in 2026, most catch-up contributions for individuals earning more than $145,000 must be made on a Roth basis.
Are small employers eligible for incentives?
Yes. Enhanced tax credits can significantly offset plan startup costs.
Disclaimer: This article provides broad information. It is only accurate as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on as tax advice. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a qualified U.S. tax lawyer or a Canadian tax lawyer.