SECURE Act 2.0: New RMD Rules, Catch-Ups, and Early Withdrawals

The SECURE Act 2.0 retirement plan changes reshape how Americans save, when they must start withdrawing, and what penalties apply if they tap accounts early. Signed into law in December 2022 as part of the Consolidated Appropriations Act of 2023, the law phases in over several years. Some provisions took effect immediately, others began in 2024 or 2025, and a handful, including the Saver’s Match and the mandatory Roth treatment of high earners’ catch-up contributions, do not fully kick in until 2027.

Here is what the law changes and when each piece applies to you.

Later RMD Ages and a Smaller Penalty

Section 107 pushed back the age at which retirement account holders must begin taking required minimum distributions. For people who turned 72 after December 31, 2022, the RMD starting age moved to 73.¹ A second increase takes effect January 1, 2033, raising the starting age to 75. In practical terms, people born between 1951 and 1959 fall under the age-73 rule, and those born in 1960 or later will not need to start RMDs until they turn 75.

The penalty for missing an RMD dropped as well. The old excise tax was 50% of the amount you failed to withdraw. Under the new law, that penalty is 25%.¹ If you correct the shortfall within two years, the penalty drops further to 10%. You still calculate your annual RMD using the IRS life expectancy tables in Publication 590-B.²

No More RMDs on Roth 401(k) and 403(b) Balances

Before 2024, Roth accounts inside employer plans were still subject to lifetime required minimum distributions, even though Roth IRAs never were. Section 325 eliminated that inconsistency. Starting in 2024, designated Roth balances in 401(k) and 403(b) plans are no longer subject to lifetime RMDs, so you can leave that money untouched for as long as you live and let it keep growing tax-free.

2026 Contribution and Catch-Up Limits

For 2026, the annual elective deferral limit for 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan rises to $24,500, up from $23,500 in 2025. The IRA contribution limit increases to $7,500, up from $7,000. Workers 50 and older can contribute an additional $8,000 in catch-up contributions to their 401(k) or similar plan, up from $7,500 in 2025.³

Bigger Catch-Ups for Ages 60 Through 63

Section 109 created a special catch-up window for workers turning 60, 61, 62, or 63 during the calendar year, starting in 2025. Instead of the standard catch-up amount, this group can contribute the greater of $10,000 (indexed annually for inflation beginning in 2026) or 150% of the regular catch-up limit that applied in 2024.⁴ Because the 2024 standard catch-up was $7,500, 150% of that equals $11,250. Once a worker turns 64, the limit drops back to the standard catch-up amount for those 50 and older.

Roth-Only Catch-Ups for High Earners

Under Section 603, workers who earned more than $145,000 in FICA wages from their employer during the prior calendar year must make all catch-up contributions on an after-tax Roth basis.⁵ The $145,000 threshold is indexed annually for inflation. Workers below that threshold can still make catch-up contributions on either a pre-tax or Roth basis, depending on what the plan offers.

This requirement was originally supposed to take effect in 2024, but the IRS granted an administrative transition period. The final regulations apply to taxable years beginning after December 31, 2026, making 2027 the first year the mandate is fully enforceable.⁶ Plans can implement it earlier under a reasonable good-faith reading of the statute, and many large employers already have.

New Ways to Take Money Out Before 59½ Without a Penalty

Withdrawing from a retirement account before age 59½ normally triggers a 10% penalty on top of ordinary income tax. The SECURE Act 2.0 added several exceptions.

Emergency Personal Expenses

Section 115 allows one penalty-free withdrawal per calendar year for an unforeseeable personal emergency, up to $1,000. The amount you can take is actually the lesser of $1,000 or the amount by which your vested account balance exceeds $1,000. You can repay the withdrawal within three years, and if you do, you can take another emergency distribution during that period. If you do not repay, you generally cannot take another emergency withdrawal for three years.⁷

Domestic Abuse Victims

Section 314 allows victims of domestic abuse to withdraw the lesser of $10,000 (indexed for inflation) or 50% of their vested account balance without the 10% penalty. The distribution must be taken within one year of the abuse. Recipients have three years to repay the funds, and if they do, they can claim a refund of any income taxes paid on the distribution. This provision applies to distributions made after December 31, 2023.⁸

Terminal Illness

Section 326 added a penalty exception for individuals certified by a physician as having an illness or condition reasonably expected to result in death within 84 months. The participant must provide medical certification to claim the exception.⁷

Qualified Birth or Adoption

The original SECURE Act allowed penalty-free withdrawals of up to $5,000 for a birth or adoption but left the repayment timeline open-ended. Section 311 clarified that repayment must occur within three years after the distribution date. This applies to distributions taken after December 29, 2022.

Pension-Linked Emergency Savings Accounts

Section 127 created a new type of account, the pension-linked emergency savings account, or PLESA. Employers that sponsor a defined contribution plan can offer PLESAs to help workers build a short-term cash reserve alongside their retirement savings. Only non-highly-compensated employees are eligible.⁹

PLESAs are treated as designated Roth accounts, so contributions go in after-tax and growth is tax-free. The maximum balance attributable to employee contributions is $2,500, indexed for inflation.¹⁰ Once the account hits that cap, additional contributions automatically roll into the employee’s regular Roth account within the plan. Employers can auto-enroll eligible employees. Participants can withdraw from a PLESA at least once per calendar month, without penalties and without justifying the withdrawal.

Employer Match on Student Loan Payments

Section 110 lets employers treat an employee’s qualified student loan payments as retirement plan contributions for matching purposes. If you are paying down student loans and cannot afford to also contribute to your 401(k), your employer can still deposit a match into your retirement account based on the loan payments you are making. This applies to 401(k), 403(b), SIMPLE IRA, and governmental 457(b) plans, and it took effect for plan years beginning after December 31, 2023.¹¹

The employer must apply the same match rate and vesting schedule as it does for regular salary deferrals. Employees certify their loan payments annually, and a plan can rely on the employee’s self-certification without requiring supporting documentation.¹¹ The certification must include the payment amount, the payment date, confirmation the employee made it, and confirmation that the loan is a qualified education loan the employee incurred.

Rolling Leftover 529 Money Into a Roth IRA

Section 126 created a way to move unused 529 education savings into a Roth IRA for the 529 account’s beneficiary, helpful for families who overfunded a college savings account or whose beneficiary received scholarships. The lifetime cap on these rollovers is $35,000 per beneficiary.¹²

Several conditions apply:

The 529 account must have been open for at least 15 years.
Only contributions, and their earnings, made more than five years before the rollover date are eligible.
The amount rolled over in any year, combined with any direct Roth IRA contributions the beneficiary makes that year, cannot exceed the annual Roth IRA contribution limit.
The Roth IRA must belong to the 529 account’s designated beneficiary.

Because each rollover counts against the annual Roth IRA contribution limit, it takes several years to transfer the full $35,000.¹² The beneficiary also needs earned income at least equal to the rollover amount.

Automatic Enrollment in Newer Employer Plans

Section 101 requires employers that established a new 401(k) or 403(b) plan after December 29, 2022, to automatically enroll eligible employees. The default contribution rate must fall between 3% and 10% of pretax pay, and the plan must include an automatic escalation feature that raises the rate by 1 percentage point each year until it reaches a cap of at least 10% but no more than 15%.⁷ Employees can opt out entirely or choose a different rate at any time. These requirements took effect for plan years starting after December 31, 2024.

Small businesses with 10 or fewer employees, companies in operation for fewer than three years, and church and government plans are exempt. Plans that existed before December 29, 2022, are also grandfathered and do not need to add automatic enrollment.⁷

Part-Time Workers Get In Sooner

The original SECURE Act of 2019 required part-time workers to complete three consecutive years of at least 500 hours before joining an employer plan. The SECURE Act 2.0 shortened that to two consecutive years of at least 500 hours, effective for plan years beginning after December 31, 2024.¹³ Employees must also be at least 21.

One caveat matters: employers are not required to make matching or nonelective contributions for employees who qualify solely through this long-term part-time provision.¹³ The rule guarantees access to make salary deferrals, not a right to employer contributions. If a part-time worker later crosses 1,000 hours in a single year, they become a regular participant and the employer can no longer exclude them from matching.

The Saver’s Match Replaces the Saver’s Credit in 2027

Starting in tax year 2027, the existing Saver’s Credit will be replaced by a new Saver’s Match. The current credit reduces your tax bill, but many low-income filers owe little or no tax, so the benefit often goes unused. The Saver’s Match instead deposits money directly into the taxpayer’s retirement account.¹⁴

The federal government will match 50% of up to $2,000 in retirement contributions, for a maximum match of $1,000 per person. Single filers with modified adjusted gross income below $20,500 ($41,000 for married couples filing jointly) qualify for the full match, with a gradual phase-out for incomes up to $15,000 above those thresholds ($30,000 for joint filers).¹⁴ Both traditional and Roth contributions qualify, though the match itself goes into a traditional account. The income thresholds will be adjusted for inflation after 2027.

1
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
2
Internal Revenue Service. Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
Thrift Savings Plan. TSP Bulletin 24-2 – SECURE 2.0 Act Provisions
5
Federal Register. Catch-Up Contributions
6
Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions
7
Internal Revenue Service. Notice 2024-2 – Miscellaneous Changes Under the SECURE 2.0 Act of 2022
8
Internal Revenue Service. Notice 2024-55 – Certain Exceptions to the 10 Percent Additional Tax Under Code Section 72(t)
9
Internal Revenue Service. Notice 2024-22 – Guidance on Anti-Abuse Rules Under Section 127 of the SECURE 2.0 Act
10
U.S. Department of Labor. FAQs – Pension-Linked Emergency Savings Accounts
11
Internal Revenue Service. Notice 2024-63 – Guidance Under Section 110 of the SECURE 2.0 Act with Respect to Matching Contributions Made on Account of Qualified Student Loan Payments
12
Office of the Law Revision Counsel. 26 U.S. Code 529 – Qualified Tuition Programs
13
Internal Revenue Service. Notice 2024-73 – Additional Guidance with Respect to Long-Term, Part-Time Employees
14
Congressional Research Service. The Retirement Savings Contribution Credit and the Saver’s Match