SECURE 2.0 Act Retirement Plan Changes Every CPA Must Know for 2025–2026

The SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328) introduced over 90 retirement plan provisions phased in through 2027. As of 2025, the most consequential changes are active: the RMD age is now 73, enhanced catch-up contribution limits for clients aged 60–63 took effect January 1, mandatory auto-enrollment applies to new 401(k) plans, and the Roth catch-up requirement for high earners takes effect in 2026. CPAs who have not updated client retirement planning conversations are leaving significant tax reduction opportunities — and creating compliance exposure — on the table for the clients who most need the guidance.

RMD Age Is Now 73 — and Will Rise to 75 in 2033

SECURE 2.0 §107 raised the required minimum distribution (RMD) age from 72 to 73, effective January 1, 2023, amending IRC §401(a)(9)(C). Clients born in 1951 or later — who had not yet begun RMDs under the old age-72 rule — are not required to take their first RMD until April 1 of the year following the year they turn 73. A second increase is scheduled: clients born in 1960 or later will not face RMDs until age 75, effective January 1, 2033.

Grandfathering note: Clients who turned 72 in 2022 were required to begin RMDs under the prior rules and remain on the age-72 schedule. The age-73 rule applies only to clients who had not yet reached age 72 by December 31, 2022.

Planning implications:

• The deferral window creates a Roth conversion opportunity. A client who retires at 68 and turns 73 in 2030 has a four-to-five-year window where no RMD is required and income may be substantially lower than working years — a favorable window for converting traditional IRA balances to Roth at a lower marginal rate. The converted balance reduces the future taxable RMD base permanently.
• Clients who do not need the RMD income for living expenses may be tempted to delay the first distribution to the April 1 deadline — but that requires taking two RMDs in year two (April 1 and December 31), which compresses distributions and may push the client into a higher bracket. For most clients, taking year one's RMD in year one avoids the income bunching.
• Qualified Charitable Distributions (QCDs) remain available starting at age 70½ — five to seven years before RMDs begin under the new rules. Clients who are charitably inclined can reduce the future taxable IRA balance through QCDs starting well before the mandatory distribution window opens.

For the step-by-step framework for evaluating and executing Roth conversions during this window — including pro-rata rule analysis, bracket-filling math, IRMAA threshold modeling, and estimated tax coordination — see How to Advise Clients on Roth IRA Conversions. For coordinating Roth conversion timing with year-end income management, QBI phase-out thresholds, and estimated tax, see Year-End Tax Planning Checklist for CPAs.

Enhanced Catch-Up Contributions for Ages 60–63 (Effective 2025)

SECURE 2.0 §109 created a new catch-up contribution tier for plan participants aged 60, 61, 62, or 63 — sometimes called the "super catch-up" — effective for plan years beginning on or after January 1, 2025, under IRC §414(v)(7). The enhanced limit is the greater of $10,000 or 150% of the standard catch-up amount for the year, indexed for inflation.

2025 limits (IRS Rev. Proc. 2024-40):

For 2025: 150% × $7,500 = $11,250 (which exceeds $10,000), making the 401(k) enhanced limit $11,250. For SIMPLE IRAs: 150% × $3,500 = $5,250. At age 64, the contribution reverts to the standard age-50+ catch-up level.

Who benefits most: High-income clients in their early sixties with S-Corp structures whose W-2 salary can be set to support the full employee deferral. A client who turns 60 in 2025 and receives a W-2 salary from their S-Corp can defer $34,750 in employee contributions to their 401(k), plus a separate employer profit-sharing contribution of up to 25% of W-2 wages — subject to the $70,000 annual additions limit under IRC §415(c). This produces a combined contribution ceiling that significantly exceeds what was available before SECURE 2.0.

S-Corp salary coordination: The solo 401(k) employee deferral and the employer profit-sharing component are both calculated on W-2 wages, not on net SE income or K-1 distributions. For S-Corp clients approaching age 60, the year-end salary review should explicitly model whether adjusting W-2 compensation unlocks additional 401(k) contribution room — the interaction cuts both ways depending on the client's income level. For how retirement plan contributions interact with S-Corp salary and self-employment tax, see How to Minimize Self-Employment Tax for High-Earning Business Clients.

Roth Catch-Up Requirement for High Earners — Effective 2026

SECURE 2.0 §603 requires that employees with W-2 wages exceeding $145,000 from the same employer in the preceding calendar year must make all catch-up contributions on a Roth (after-tax) basis, amending IRC §402(g). The provision was originally scheduled to take effect for tax years beginning after December 31, 2023. IRS Notice 2023-75 extended the administrative transition period through December 31, 2025. The mandatory Roth catch-up requirement is now scheduled to apply to plan years beginning on or after January 1, 2026.

2025 status: Catch-up contributions may still be made on a pre-tax basis for all participants regardless of W-2 wages. No changes to employee elections or plan documents are required for the 2025 plan year on this issue alone.

2026 compliance requirements:

• Employees who earned $145,000 or more in 2025 W-2 wages from the same employer must designate their catch-up contributions as Roth in 2026. Pre-tax catch-up will no longer be available for this group.
• Plans that do not currently offer a Roth contribution option must be amended to add one before January 1, 2026. A plan without Roth capability that has high-earning participants over age 50 will be unable to permit any catch-up contributions at all in 2026 — not a defensible outcome. Plan administrators and TPAs should have this amendment on their calendar for Q2–Q3 2025.
• The $145,000 W-2 wage threshold is measured from the same employer and is indexed for inflation (the 2025 applicable threshold for 2026 Roth treatment will be confirmed by IRS guidance before year-end).

Planning trade-off: Roth catch-up contributions eliminate the current-year deduction in exchange for tax-free growth and no future RMD requirement on the Roth balance. For high-income clients in the 37% bracket who expect meaningfully lower income in retirement, the loss of the current-year deduction may exceed the long-term benefit. For clients in the 22%–24% bracket, or those anticipating higher future marginal rates, the Roth treatment is advantageous. The analysis is identical to a Roth conversion decision, applied to the catch-up amount.

Mandatory Auto-Enrollment for New Plans (Plan Years Beginning 2025)

SECURE 2.0 §101 requires that 401(k) and 403(b) plans established after December 29, 2022, automatically enroll eligible employees at a default deferral rate between 3% and 10%, with automatic annual escalation of 1% per year up to a minimum of 10% and maximum of 15%, under IRC §401(k)(15). This requirement applies to plan years beginning after December 31, 2024 — meaning calendar-year plans established post-enactment that have not yet implemented auto-enrollment face exposure beginning January 1, 2025.

Statutory exceptions (IRC §401(k)(15)(C)):

• Businesses with 10 or fewer employees
• Businesses in existence for fewer than 3 years as of the plan year
• Church plans
• Governmental plans

CPA action item: Many small businesses that established new 401(k) or 403(b) plans between January 2023 and December 2024 are subject to this mandate and may not know it. The requirement is not self-executing — it requires a plan document amendment and payroll system configuration from the plan administrator or TPA. Auto-enrollment failures are correctable under EPCRS (IRS Rev. Proc. 2021-30), but early correction is less costly than correction triggered by a DOL or IRS examination.

Flag any business client that created a new retirement plan in 2023 or 2024 and confirm that auto-enrollment is either implemented or that an exception applies. The missed-deferral make-up requirement for failures caught late can create material employer costs, particularly if many employees would have deferred at the default rate.

529-to-Roth Rollovers, Student Loan Matching, and Emergency Savings Accounts

Three SECURE 2.0 provisions effective beginning January 1, 2024 address planning conversations with clients who have college savings accounts, younger workforces with student debt, or employees who need accessible short-term savings.

529-to-Roth IRA Rollovers (SECURE 2.0 §126, IRC §408A(e)): The beneficiary of a 529 account that has been open for at least 15 years may roll over up to $35,000 (lifetime maximum) to a Roth IRA in the beneficiary's name. Annual rollovers are limited to the Roth IRA contribution limit for the year ($7,000 in 2025). The rollover is not subject to the Roth IRA income limits that would otherwise prohibit high-earning beneficiaries from contributing directly. For clients who funded 529 accounts years ago and whose beneficiaries have unused balances — from scholarships, lower-cost education, or career changes — the rollover converts a potentially stranded asset into tax-free Roth savings without the 10% non-qualified distribution penalty.

Student Loan Matching (SECURE 2.0 §110, IRC §401(m)): Employers may treat an employee's qualified student loan payment (QSLP) as an elective deferral for matching contribution purposes. An employee making student loan payments but not contributing to the 401(k) can receive employer matching contributions based on those loan payments. This provision is optional and requires a plan document amendment to implement. For businesses competing for younger talent, student loan matching may be more valued than traditional employer matching — a differentiated benefit worth modeling for client businesses with significant under-25 or under-35 workforce demographics.

Pension-Linked Emergency Savings Accounts (PLESAs) (SECURE 2.0 §127, IRC §402A): Employers may offer short-term savings accounts alongside defined contribution plans for non-highly compensated employees, capped at $2,500. The first four withdrawals per year are penalty and tax free. PLESAs are designed to reduce early retirement plan withdrawals — a behavioral intervention that protects retirement savings by giving employees an accessible emergency fund that is not their 401(k).

Small Employer Incentives: SIMPLE IRA Enhancements and the Starter 401(k)

SIMPLE IRA higher limits for small employers (SECURE 2.0 §117, effective 2024): Employers with 25 or fewer employees may increase SIMPLE IRA contribution limits by up to 110% of the standard amounts. Employers with 26–100 employees may use the higher limits if they make a 3% matching contribution or 2% non-elective contribution. CPAs advising sole proprietors or small professional practices that sponsor SIMPLE IRAs should confirm whether the employer has implemented the higher limit option — many have not, and the additional contribution room may be significant for clients near retirement.

Starter 401(k) Plans (SECURE 2.0 §121, IRC §401(k)(16), effective 2024): Small businesses can now establish simplified 401(k) or 403(b) plans with mandatory auto-enrollment at 3–15%, no employer match required, and employee contribution limits equal to the IRA limit ($7,000 in 2025, including catch-up). This lowers the administrative barrier to sponsoring a retirement plan for businesses that find full 401(k) administration cost-prohibitive. A client with 5–15 employees who wants to offer a retirement benefit without TPA overhead costs may find the Starter 401(k) a practical starting point.

For how retirement plan contributions interact with QBI phase-out modeling and quarterly estimated tax calculations, see QBI Deduction in 2025: How Section 199A Works After OBBBA and How to Calculate and File Quarterly Estimated Taxes for Business Clients. For CPAs advising clients on which plan type to establish — SEP IRA, SIMPLE IRA, or Solo 401(k) — see SEP IRA vs SIMPLE IRA vs Solo 401(k): Choosing the Right Retirement Plan for Small Business Clients.

FAQs

When does the enhanced catch-up contribution for ages 60–63 take effect?

The enhanced catch-up limit for plan participants aged 60, 61, 62, or 63 is effective for plan years beginning on or after January 1, 2025, per SECURE 2.0 §109 and IRC §414(v)(7). For calendar-year plans, the $11,250 enhanced 401(k) catch-up limit is available starting January 1, 2025. The enhanced limit applies only during these four specific ages — at 64, the contribution reverts to the standard age-50+ catch-up amount ($7,500 for 401(k) plans in 2025).

Does the Roth catch-up requirement apply to my clients in 2025?

No. IRS Notice 2023-75 extended the administrative transition period through December 31, 2025. In 2025, employees may still make catch-up contributions on a pre-tax basis regardless of their prior-year W-2 wages. The mandatory Roth catch-up treatment for employees earning $145,000 or more is scheduled to take effect for plan years beginning on or after January 1, 2026. Use 2025 to confirm that client plans have Roth contribution capability and that plan administrators have the 2026 amendment on their calendar.

What do plan sponsors need to do before 2026 for the Roth catch-up rule?

Any 401(k) plan that does not currently offer a Roth contribution option must be amended before January 1, 2026. Without the amendment, participants who earned $145,000 or more in the prior year will be unable to make any catch-up contributions — pre-tax catch-up is no longer available for this group after the effective date, and Roth catch-up is unavailable without plan Roth capability. The plan document amendment and payroll system update should be initiated with the TPA by mid-2025 at the latest. For a step-by-step 2026 implementation guide — including the updated $150,000 threshold (confirmed by final Treasury regulations), how to identify high earners from 2025 W-2 Box 3 wages, TPA coordination steps, payroll system configuration, and the "deemed Roth" simplification option — see Mandatory Roth Catch-Up Contributions 2026: Employer and CPA Action Guide.

Which clients are subject to the auto-enrollment mandate for new 401(k) plans?

Plans established after December 29, 2022, that have 11 or more employees, have been in business for 3 or more years, and are not church or governmental plans must implement auto-enrollment for plan years beginning after December 31, 2024. For most affected calendar-year plans, this means compliance was required starting January 1, 2025. Auto-enrollment failures are correctable under EPCRS, but early correction is less costly than late discovery.

What is the RMD age under current law and how does it affect a client born in 1955?

A client born in 1955 turns 73 in 2028. Under SECURE 2.0, they are not required to begin RMDs until April 1, 2029. The window between retirement and the RMD start date is typically the best opportunity for Roth conversions — income is lower than working years, each dollar converted reduces the future taxable RMD base, and the client avoids the bracket-compressing income spike that large mandatory distributions would otherwise create in their late seventies.

Can a 529 beneficiary roll over funds to a Roth IRA even after graduating?

Yes, subject to conditions. The 529 account must have been open for at least 15 years, the rollover must go to a Roth IRA owned by the 529 beneficiary (not the account owner), the lifetime maximum is $35,000, and annual rollovers cannot exceed the Roth IRA contribution limit ($7,000 in 2025). Graduation status does not affect eligibility. The provision is designed precisely for clients whose 529 funds went unused due to scholarships, low-cost education, or career changes that did not require a traditional degree.

How do the SECURE 2.0 enhanced catch-up limits interact with the Solo 401(k) for self-employed clients?

Self-employed individuals with Solo 401(k) plans are eligible for the enhanced catch-up contribution if they are between ages 60 and 63. The employee deferral portion can reach $34,750 in 2025 ($23,500 base + $11,250 enhanced catch-up). A separate employer profit-sharing contribution — up to 25% of net SE income after the SE tax deduction, or 25% of W-2 wages for S-Corp owners — can be added on top, subject to the $70,000 annual additions limit under IRC §415(c). For S-Corp owners in this age bracket, the combination of enhanced deferrals plus profit-sharing often creates the single largest available deduction in the client's income profile.

Arvori helps CPAs track retirement plan contribution limits, flag clients approaching RMD age, and coordinate SECURE 2.0 compliance deadlines across the full client roster. Learn more at arvori.app.