What Is the SECURE Act and How Does It Affect Retirement?

The SECURE Act is a 2019 federal law, formally the Setting Every Community Up for Retirement Enhancement Act, that rewrote several core rules for retirement savings. Signed on December 20, 2019, it raised the age for required minimum distributions, removed the age cap on traditional IRA contributions, imposed a 10-year drain on most inherited retirement accounts, and opened 401(k) plans to long-term part-time workers. Congress expanded and adjusted many of those provisions three years later in the SECURE 2.0 Act, passed in December 2022. If you save for retirement, inherit an IRA, hire employees, or are approaching your 70s, the combined law changes what you have to do and when.

When You Have to Start Taking Money Out

The law raised the age at which you must begin required minimum distributions (RMDs) from accounts like 401(k)s and traditional IRAs. Before 2020, RMDs started at 70½. The original SECURE Act moved that to 72 for anyone who had not already turned 70½ by the end of 2019.¹

SECURE 2.0 pushed it higher. If you turned 72 after December 31, 2022, your starting age is 73. It rises again to 75 in 2033 for people who turn 74 after December 31, 2032.² If you turn 73 in 2026, your first distribution is generally due by April 1, 2027.

What Happens If You Miss an RMD

Miss the deadline and you owe an excise tax on whatever you should have withdrawn. The old penalty was 50% of the shortfall. SECURE 2.0 cut the standard rate to 25%.³

It falls further to 10% if you fix the mistake inside a “correction window,” meaning you take the missed distribution and file a return reflecting the tax by the end of the second tax year after the year the penalty was triggered.³ The IRS can also waive the penalty entirely if the shortfall was a reasonable error and you’re taking steps to correct it.⁴

Traditional IRA Contributions After 70½

Before the SECURE Act, contributions to a traditional IRA had to stop at 70½. That restriction is gone. You can contribute at any age as long as you have earned income from wages, salary, or self-employment. Social Security, pensions, and investment income don’t count.⁵

For 2026, the annual IRA contribution limit is $7,500, or $8,600 if you’re 50 or older.⁶ The change aligns traditional IRAs with 401(k) plans, which never had an age cap on contributions.

The 10-Year Rule for Inherited IRAs and 401(k)s

The most disruptive change affects heirs. Most non-spouse beneficiaries of a retirement account must now empty it by the end of the tenth calendar year after the original owner’s death.² This replaced the old “stretch IRA,” which let beneficiaries spread distributions across their own life expectancy, sometimes for decades.

A detail that catches many beneficiaries off guard: if the original owner died on or after their own required beginning date for RMDs, the beneficiary must take annual distributions during the 10-year window, not just a lump sum at the end.⁷ If the owner died before that date, you can wait and take everything by year 10 with no required annual withdrawals in between.⁸

Certain “eligible designated beneficiaries” can still use life-expectancy distributions:

Surviving spouses, who can also roll inherited assets into their own IRA.
Minor children of the account owner, until they reach the age of majority, when the 10-year clock starts.
Disabled or chronically ill individuals who meet the tax code’s definitions.
Beneficiaries not more than 10 years younger than the deceased.

These categories apply to deaths occurring on or after January 1, 2020.⁹

Part-Time Workers and 401(k) Access

Employers used to be able to exclude workers who logged fewer than 1,000 hours in a year from their 401(k) plans. The SECURE Act created a route in for long-term part-timers who put in at least 500 hours per year over consecutive years.¹

The original law required three consecutive years. SECURE 2.0 shortened it to two consecutive years of at least 500 hours each, effective for plan years beginning after December 31, 2024.¹⁰ Two years is the operative rule in 2026. Eligible part-time workers can defer pay into the plan, though employers are not required to provide matching contributions for these participants.¹

Penalty-Free Withdrawals for a New Child

You can withdraw up to $5,000 from a retirement account without the usual 10% early-withdrawal penalty when you have or adopt a child.¹¹ The withdrawal has to happen within a year of the birth or the finalized adoption. Each parent can take it from their own account, so a couple can access up to $10,000 between them. An adopted child must be under 18 or physically or mentally unable to support themselves.

The amount is still taxable income for the year you receive it. But you can put the money back into an eligible retirement account within three years of the distribution, and the repayment is treated as a tax-free rollover.¹¹

Catch-Up Contributions After 50

Workers 50 and older have long been able to make extra “catch-up” contributions above the standard 401(k) limit. In 2026, the standard limit is $24,500 and the general catch-up is $8,000, for a combined maximum of $32,500.⁶

SECURE 2.0 added a bigger catch-up for workers aged 60 through 63. In 2026, those participants can contribute up to $11,250 in catch-ups instead of $8,000, taking their total 401(k) deferral as high as $35,750.⁶

Also starting in 2026, if you earned more than $150,000 from your employer in the prior year, any catch-up contribution has to go in on a Roth (after-tax) basis. Under that threshold, you keep the choice between pre-tax and Roth.

Student Loan Payments as Retirement Contributions

SECURE 2.0 lets employers treat your qualifying student loan payments as if they were retirement plan contributions for purposes of the employer match. If your employer offers the feature and you’re putting your money toward loans rather than the 401(k), the employer can still deposit a match into your retirement account.¹² It applies to 401(k), 403(b), SIMPLE IRA, and governmental 457(b) plans. Employers aren’t required to offer it, but where they do, you no longer choose between paying down education debt and earning your match.

Rolling a 529 Into a Roth IRA

Starting with distributions made after December 31, 2023, unused 529 education savings can be rolled into a Roth IRA for the plan’s beneficiary. The option is aimed at families who overfunded a college account or whose beneficiary received scholarships. Several conditions apply:¹³

The 529 must have been open more than 15 years.
Only contributions made more than five years before the rollover date are eligible.
You can’t transfer more than the Roth IRA contribution limit for the year, which is $7,500 in 2026.
Total rollovers are capped at $35,000 per beneficiary across all years.
The move must be a direct trustee-to-trustee transfer.

A rollover counts toward the beneficiary’s Roth IRA contribution limit for that year, so a full $7,500 rollover in 2026 leaves no room for a separate Roth contribution.¹³

What Changed for Employers

If you run a small business, the law expanded the tax credits for offering a retirement plan. Employers with 50 or fewer employees can claim up to $5,000 per year for three years toward the ordinary costs of starting a new 401(k), SEP, or SIMPLE IRA; employers with 51 to 100 employees can claim 50% of eligible costs up to $5,000. A separate credit of up to $1,000 per participating employee covers employer contributions during the first two plan years, and adding automatic enrollment brings an additional $500 annual credit for three years. All are claimed on the federal tax return.¹⁴

SECURE 2.0 also requires most new 401(k) and 403(b) plans established after December 29, 2022, to automatically enroll eligible employees, effective for plan years beginning after December 31, 2024.¹⁵ The default contribution rate has to fall between 3% and 10% of pay and step up by 1% each year to a cap between 10% and 15%. Employees can always opt out or pick a different rate. Small businesses with 10 or fewer employees, companies operating for fewer than three years, church plans, and governmental plans are exempt, and plans that existed before SECURE 2.0 was enacted are grandfathered.

1
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
2
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
3
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
4
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
5
Office of the Law Revision Counsel. 26 USC 219 – Retirement Savings
6
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Internal Revenue Service. Required Minimum Distributions
8
Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements (IRAs)
9
Internal Revenue Service. Retirement Topics – Beneficiary
10
Federal Register. Long-Term, Part-Time Employee Rules for Cash or Deferred Arrangements Under Section 401(k)
11
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
12
Internal Revenue Service. Guidance Under Section 110 of the SECURE 2.0 Act
13
Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
14
Internal Revenue Service. Retirement Plans Startup Costs Tax Credit
15
Federal Register. Automatic Enrollment Requirements Under Section 414A