The SECURE 2.0 Act, signed into law on December 29, 2022, ushers in significant changes to retirement plans across the U.S. Its purpose: to increase retirement security by expanding plan access and encouraging greater savings. Below is a breakdown of the Act’s key provisions and how they impact HR and payroll pros; we focus on contributions, enrollment, and new retirement plan features.
Contribution Changes for 401(k), 403(b), and 457(b) Plans
The SECURE 2.0 Act introduces higher contribution limits for 2025 and other changes to retirement plans, making it easier for employees to save more for retirement.
Contribution Limits for 2025
- Standard Limit: $23,500
- Catch-Up Contributions:
- Participants aged 60-63 (inclusive) may make catch-up contributions of up to $11,250 for 2025 instead of the standard $7,500 catch-up limit.
- For all others age 50 or older but not in the 60-63 range, the catch-up limit remains $7,500.
- 403(b) Special 15-Year Rule: $3,000
Roth Option for Employer Contributions
Employees can elect to have their employer matching contributions made on a Roth (after-tax) basis, where applicable.
- Employer Actions: Employers must update their plan documents to allow Roth matching.
- Tax Implications: Roth employer contributions are taxable income for the employee, and a 1099-R form will be issued.
- Available for plan years beginning after December 29, 2022.
Changes for SIMPLE IRAs
The SECURE 2.0 Act enhances SIMPLE IRAs by allowing for greater contribution limits, making them more attractive to employers and employees alike.
2025 SIMPLE IRA Contribution Limits
- Standard SIMPLE IRA:
- Contribution Limit: $16,500
- Standard Catch-Up (50+ and 64+): $3,500
- Increased Catch-Up (60-63): $5,250
- Enhanced SIMPLE IRA:
- Contribution Limit: $17,600
- Standard Catch-Up: $3,850
- Increased Catch-Up (60-63): $5,250
- *Participants cannot leverage the additional $1,100.00 in nonelective contributions, keeping the annual limit at $21,750.
Eligibility for Enhanced SIMPLE IRA
- Employers with 25 or fewer employees can adopt the enhanced contribution limits.
- Employers with 26 or more employees must provide a fully vested 4% matching contribution or a 3% non-elective contribution to qualify for the higher limits.
Employer Contributions
Employers can make an additional non-elective contribution of up to 10% of compensation, capped at $5,000, for employees earning at least $5,000. This is available even if the employer is making matching contributions.
Roth Option for SIMPLE IRAs
Employers can offer a Roth option to SIMPLE IRAs, allowing employees to make after-tax contributions.
Eligibility and Enrollment Provisions
The SECURE 2.0 Act expands eligibility and changes enrollment processes, providing more inclusive retirement savings options for workers.
Part-Time Employee Eligibility
Effective in 2024, part-time employees working at least 500 hours annually for two consecutive years became eligible for 401(k) and 403(b) participation.
- Employer Contributions: Optional for these employees.
- Vesting: Service before 2023 does not count for eligibility but may be used for vesting purposes.
Automatic Enrollment in 401(k) and 403(b) Plans
New 401(k) and 403(b) plans must include automatic enrollment starting in 2023.
- Grandfather Clause: Existing plans prior to this date are exempt (grandfathered).
- Automatic Enrollment Rates: Initial enrollment must include a uniform contribution percentage that is not less than 3 percent and not more than 10 percent of pay, with an automatic increase of 1% annually up to a maximum of 10-15%.
- Opt-Out: Employees can opt-out or change contribution rates.
- Exemptions:
- SIMPLE IRA plans
- Small businesses (10 or fewer employees). *Businesses exceeding 10 employees must adopt automatic enrollment the year after crossing the threshold.
- New businesses (under 3 years),
- Church plans and government plans.
Financial Incentives for Plan Enrollment
Effective for plan years beginning after December 31, 2022, employers are permitted, but not required, to offer their employeesde minimis financial incentives for participation in 401(k) and 403(b) plans.
- IRS Notice 2024-2 which was released on December 20, 2023, provides significant guidance for employers in implementing this practice including several Q and A’s addressing various scenarios.
- Employers may offer de minimis financial incentives, which cannot exceed $250 in value, and must not come from plan assets;
- Incentives may only be offered to employees that do not have a deferral election in place, and must be offered to all nonparticipating employees, as opposed to specific individuals or groups.
- The incentives may be distributed in installments contingent on the employee continuing to defer.
- Incentives constitute remuneration that is includible in the employee’s gross income and wages and will be subject to applicable withholding and reporting requirements for employment tax purposes unless an exception applies. Note: gift cards are not excludable from the employee’s gross income as a de minimis fringe benefit because they are considered a cash equivalent.
Student Loan Matching Contributions
A new provision allows employers to match student loan repayments with retirement plan contributions. This option benefits employees who may be paying off student loans but want to save for retirement.
Key Details
- Eligible Plans: Includes 401(k), 403(b), SIMPLE IRAs, and 457(b) plans.
- Voluntary Feature: Employer participation is optional but must be made available to all employees eligible for matching contributions based on elective deferrals.
- Certification: Employees must certify their student loan payments as qualifying.
- Plan Amendments: Employers must update their plans to offer this option.
Contribution Limits
Student loan matching contributions count toward the overall annual limit on matching contributions and, where applicable, reduce the amount an employee may defer through elective contributions for the calendar year.
Claim Deadlines
Employers can set annual or quarterly deadlines for claiming QSLP matches, ensuring they are reasonable.
Employers may access additional information and details in interim guidance issued by the IRS in Notice 2024-63 which is presented in Q and A format.
January 1, 2026, Roth Catch-up Requirement Effective
The SECURE 2.0 Act of 2022 requires certain age-50+ catch-up contributions to be made on a Roth (after-tax) basis, for participants in 401(k), 403(b), and governmental 457(b) plans. The requirement applies to participants who are currently aged fifty (50) or will reach age fifty (50) by the end of the calendar year.
The Treasury and the IRS published final regulations on September 16, 2025, providing guidance on the Roth catch-up mandate, effective January 1, 2026.
The Roth-only rule applies to catch-up contributions for participants whose prior-year FICA wages from the plan sponsor exceed $145,000, adjusted for cost-of-living changes. For 2025, the threshold remains $145,000. For those participants who meet this threshold, all age-50+ catch-up contributions for the following year must be designated as Roth.
If your plan does not allow Roth contributions, employees exceeding this statutory threshold are not permitted to make catch-up contributions. Employers must be aware that plans may generally permit catch-up contributions, but employees will not be able to make such contributions without clear provision for them in the plan document itself.
Employers: ensure your retirement plan allows for Roth contributions.
- If your plan does not allow Roth contributions:
- Employees who earned $145,000 or more in FICA wages during the prior calendar year cannot make catch-up contributions.
- Employees who earned less than $145,000 may still make catch-up contributions on a pre-tax basis.
- Notify Checkwriters immediately if your plan does not permit Roth contributions so we can ensure your account is properly configured.
*Although the Roth catch-up contribution requirement officially takes effect on January 1, 2026, compliance with the new rules generally applies to contributions made for taxable years beginning after December 31, 2026.
For taxable years beginning before 2027, retirement plans may apply the Roth catch-up requirement based on a reasonable, good-faith interpretation of the law. The final regulations do not extend or change the administrative transition period established under Notice 2023-62, which continues through December 31, 2025.
The final regulations are largely consistent with the proposed rules released on January 13, 2025, with some changes in response to comments received, such as wage aggregation from certain separate common law employers in determining whether the participant exceeds the Roth catch-up wage threshold, and correction methods for failures to treat catch-up contributions as designated Roth contributions. These changes aim to balance compliance with the requirements with flexibility and relief for plan administrators.
Correction methods available under the final regulations include the Form W-2 correction method and the in-plan Roth rollover correction method. The Form W-2 correction method involves transferring the contribution to the Roth account and reporting it as a Roth contribution on Form W-2. The in-plan Roth rollover method involves rolling over the contribution to the Roth account and reporting it on Form 1099-R. In response to comments, the Treasury and IRS included in the final regulations, a de minimis exception allowing for failures not exceeding $250 to be disregarded. Additionally, corrections are not required if the participant’s FICA wages for the calendar year preceding the calendar year in which the taxable year begins were not determined to exceed the Roth catch-up threshold until after the deadline for corrections. In other words, plans may rely on a participant’s final Form W-2 for determining the Roth catch-up requirement.
Looking Ahead:
SECURE 2.0 significantly reshapes plan design, eligibility, and contribution mechanics—raising limits for 2025, expanding Roth options (including for employer contributions), enhancing SIMPLE IRA features, broadening part‑time eligibility, encouraging automatic enrollment, permitting de minimis enrollment incentives, and enabling student‑loan matching across common plan types.
Ongoing monitoring of IRS guidance and timely plan amendments will be essential to maintain compliance and optimize participation. Staying informed and proactive now will position HR and payroll teams to implement these changes efficiently and support employees’ retirement readiness.