SECURE Act 2.0 Implementation Continues

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Last spring, The Contractors Plan blog shared a table describing important provisions of the SECURE Act 2.0. Since then, many of the key provisions have taken effect. Some recently, with more in 2025. The SECURE Act 2.0, passed in 2022, is meant to improve access to retirement plans and the ability to save for retirement while also easing employer administration requirements.

In addition to the provisions that took effect before this year, several more elective provisions became available for adoption as of January 1, 2024, including:

• An increase in the cash-out limit to $7,000 from $5,000.
• A new exception from the early withdrawal penalty is created for distributions used for emergency expenses. The limit is $1,000 annually, and the participant can repay the distribution within three years.
• An employer without a retirement plan can offer a starter 401(k) plan with lower contribution limits and simplified requirements.
• Allows participants who self-certify that they experienced domestic abuse to make penalty-free withdrawals. The withdrawal is limited to the lesser of $10,000 or 50% of the vested balance.

These are just some changes that became available in 2024 that could impact your plan. Others are on the horizon for 2025, including:

• For plans created in 2023 or later, there is an auto-enrollment and auto-escalation requirement for 401(k) plans.
• An increase in the catch-up limits to the greater of $10,000 or 50% more than the regular catch-up provision for participants who are 60, 61, 62, or 63 years old. After 2025, the catch-up limits will be indexed for inflation.

These are just some of the SECURE Act 2.0’s recent and upcoming changes. For questions about these and other upcoming plan changes and design features, you may talk with your broker or contact The Contractors Plan about how these changes may impact your plan and its participants.