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The retirement savings landscape constantly evolves, but few pieces of legislation have made as big a splash as the SECURE 2.0 Act. Passed in late 2022 and rolled out over several years, this sweeping law aims to help more Americans save for retirement, increase flexibility, and address gaps in the system. For 401(k) participants, 2025 is a pivotal year, with several significant changes coming into effect that can directly impact how you save, invest, and access your retirement funds.
How SECURE 2.0 Act Changed 401(k) Rules
Whether you’re a seasoned saver or just starting your retirement journey, understanding the new 401(k) rules is essential for making the most of your workplace plan. Here’s a breakdown of what’s changed, what’s staying the same, and how you can use these updates to your advantage. Here’s how SECURE 2.0 Act changed 401(k) rules in 2025!
If you’re focused on building a retirement corpus or intend to start doing so, pay attention to the SECURE 2.0 Act. This has introduced changes to 401(k) retirement account rules. What are they and how do they impact you? Read on to learn.
Expanded Catch-Up Contributions for Ages 60-63
“Super” Catch-Up Contribution Limits
One of the most headline-grabbing changes for 2025 is the new “super” catch-up contribution for workers aged 60 to 63. Traditionally, those aged 50 and older could make additional “catch-up” contributions to their 401(k) beyond the standard annual limit. In 2025, the SECURE 2.0 Act introduces a special, even higher catch-up limit for those in the 60-63 age bracket.
For 2025, you can contribute $11,250 or 150% of the standard catch-up amount (whichever is higher) if you’re between 60 and 63. This is a significant increase over the standard catch-up ($7,500 in 2024 and indexed for inflation). This is a golden opportunity for late-career workers looking to turbo-charge their retirement savings.
Mandatory Roth Catch-Up for High Earners
But there’s a twist. If you earned more than $145,000 (indexed for inflation) from your employer in the previous year, all catch-up contributions (including the new “super” catch-up) must go into a Roth 401(k) account. That means you’ll pay taxes on the contributions now, but qualified withdrawals in retirement will be tax-free.
This rule is designed to boost tax revenue in the short term, but it also gives high earners the chance to build more tax-free income for retirement. Plan sponsors must update their systems during a transition period, but affected participants should plan ahead for the tax impact.
Mandatory Automatic Enrollment for New 401(k) Plans
Who Must Implement Auto-Enrollment
Another major change: all new 401(k) and 403(b) plans established after December 29, 2022, must automatically enroll eligible employees starting in 2025. This doesn’t apply to plans with fewer than 10 employees, plans less than three years old, government and church plans, or certain other exceptions. But for most new workplace plans, auto-enrollment is now the rule, not the exception.
Auto-Enrollment Details
Under the new rules, eligible employees will be automatically enrolled at a contribution rate of at least 3% (but not more than 10%) of their pay. Each year, the contribution rate will automatically increase by 1% until it reaches at least 10% (but not more than 15%). Employees can opt out or change their contribution rate at any time, but the default is set to encourage higher savings.
This is a game-changer for retirement readiness. Studies show that automatic enrollment dramatically increases participation rates, especially among younger and lower-income workers who might otherwise delay saving.
Other Key 401(k) Changes Effective in 2025
SIMPLE Plan Updates
The SECURE 2.0 Act also enhances SIMPLE IRAs and SIMPLE 401(k)s, which are popular with small businesses. Starting in 2025, both employee deferral limits and catch-up contribution limits are increased for these plans, narrowing the gap with standard 401(k)s. Additionally, businesses can now convert SIMPLE plans to standard 401(k)s more easily, giving employers and employees greater flexibility.
Financial Incentives for Participation
To further boost savings rates, employers are now allowed to offer small financial incentives, such as gift cards or modest bonuses, to encourage employees to join their retirement plan. These incentives are in addition to, not instead of, employer matching contributions. This creative approach aims to nudge more workers to start saving early.
Hardship and Emergency Withdrawals
Life happens, and sometimes you need access to your retirement funds before retirement. The SECURE 2.0 Act introduces new, more flexible rules for hardship and emergency withdrawals:
- Penalty-Free Emergency Distributions: Starting in 2025, you can take up to $1,000 per year from your 401(k) for a “personal or family emergency” without paying the usual 10% early withdrawal penalty. You can repay the withdrawal within three years, and you can’t take another emergency distribution until the first is repaid or three years have passed.
- Domestic Abuse and Disaster Relief: New rules allow penalty-free withdrawals of up to $10,000 (or 50% of your account, whichever is less) for those who self-certify as victims of domestic abuse. There are also streamlined rules for penalty-free withdrawals in the event of federally declared disasters.
- Expanded Hardship Withdrawals: The definition of “hardship” is broadened, and the documentation process is simplified, making it easier to access funds in dire situations.
What Stays the Same and What’s Coming Next
RMD Age and Roth 401(k) RMD Elimination
Some recent changes remain in place. The age for Required Minimum Distributions (RMDs) is now 73 for most people, and will eventually rise to 75. One of the most celebrated SECURE 2.0 changes: starting in 2024, Roth 401(k)s are no longer subject to RMDs during the account owner’s lifetime. This makes Roth 401(k)s even more attractive for those who want to maximize tax-free growth and leave a legacy.
Looking ahead, several SECURE 2.0 provisions are set to roll out in 2026 and beyond, including new options for student loan matching and expanded coverage for part-time workers. Staying informed will be key to making the most of these future enhancements.
How Beem Can Help You Navigate SECURE 2.0 Changes
The new rules can be overwhelming, with so many moving parts. That’s where digital tools like Beem come in.
- Track New Contribution Limits and Deadlines: Beem’s Budget Planner lets you input your age, income, and plan type to track how much you can contribute-including catch-up and “super” catch-up amounts.
- Set Reminders for Auto-Enrollment and Catch-Up Eligibility: Never miss a deadline or opportunity to boost your savings. Beem sends alerts when you become eligible for catch-up contributions or when your plan auto-enrolls you.
- Model Retirement Scenarios Under New Rules: Use Beem’s scenario planning to see how higher contributions, Roth catch-up rules, or emergency withdrawals could impact your retirement income and taxes.
- Holistic Planning: Integrate your 401(k) strategy with your other retirement accounts, Social Security, and personal savings for a complete view of your financial future.
By leveraging Beem, you can stay organized, proactive, and confident as you navigate the SECURE 2.0 landscape.
Conclusion
The SECURE 2.0 Act’s 2025 changes mark a new era in retirement planning. With higher catch-up limits, mandatory auto-enrollment, more flexible withdrawal options, and enhanced features for both savers and employers, there’s never been a better time to take charge of your 401(k). Don’t let the new rules catch you off guard. Review your plan, update your contributions, and consider how the SECURE 2.0 Act’s changes can help you reach your goals.
With careful planning and the help of digital tools like Beem, you can take control of your retirement savings and build a more secure financial future. It is a smart wallet app with numerous features, from cash advances to help with budgeting and even tax calculations. In addition, Beem’s Everdraft™ lets you withdraw up to $1,000 instantly and with no checks. Download the app here.
FAQs for How SECURE 2.0 Act Changed 401(k) Rules in 2025
Who qualifies for the new higher catch-up contributions?
Anyone aged 60 to 63 with a workplace 401(k) or similar plan can contribute the higher “super” catch-up amount, regardless of income. However, if you earned over $145,000 the previous year, those catch-up contributions must go into a Roth account.
What is mandatory Roth catch-up, and who does it affect?
Mandatory Roth catch-up means that if you’re a high earner (over $145,000), all catch-up contributions (including the new “super” catch-up) must go into a Roth 401(k). This applies only to those aged 50 and older who are making catch-up contributions.
How does automatic enrollment work, and can I opt out?
Automatic enrollment means you’re enrolled in your employer’s plan by default at a set contribution rate, which increases annually. You can opt out or change your contribution rate anytime, but the default is designed to help you save more.
What are the new rules for emergency withdrawals?
Starting in 2025, you can take one penalty-free emergency withdrawal of up to $1,000 per year for a personal or family emergency. You can repay this within three years, and you can’t take another until it’s repaid or three years have passed. There are also new exceptions for domestic abuse and disaster relief.
How can Beem help me make the most of these changes?
Beem helps you track contribution limits, deadlines, and eligibility for new features. It also sends reminders, models retirement scenarios, and integrates all your retirement planning in one place so you never miss an opportunity to optimize your savings.
