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What changes are coming in 2024 to Secure Act 2.0 rules?

by Alliance America
November 3, 2023


In 2024, the landscape of retirement planning and savings is set to undergo significant changes with the implementation of Secure Act 2.0 rules. These new regulations aim to enhance the existing framework established by the original Secure Act, providing individuals with additional opportunities and incentives to bolster their financial security in later years.

One notable change pertains to catch-up contributions. Currently, individuals age 50 and older can make additional contributions to their retirement accounts, such as a 401(k) or an individual retirement account (IRA), beyond the annual limits imposed on younger savers.

However, starting in 2024, these catch-up contribution limits will be increased further, allowing older Americans to boost their savings even more effectively as they approach retirement. This adjustment recognizes that individuals may encounter financial challenges earlier in life that hinder their ability to save adequately for retirement and seeks to address this imbalance.

401k plan document

Another notable change introduced by Secure Act 2.0 is automatic enrollment in 401(k) plans. This provision aims to encourage more workers to participate actively in employer-sponsored retirement plans by automatically enrolling them unless they choose otherwise.

By making enrollment automatic rather than opt-in, employees who may have previously overlooked or delayed signing up for a plan may now be enrolled from day one of employment. This shift intends to combat inertia or procrastination often associated with saving for retirement, ensuring that individuals start building their nest egg sooner rather than later.

Secure Act 2.0 also introduces emergency savings accounts as a novel feature within employer-sponsored plans like 401(k)s. Recognizing the importance of having accessible funds for unforeseen circumstances without jeopardizing long-term savings goals, these accounts will provide employees with an avenue for setting aside money specifically designated for emergencies like medical expenses or unexpected job loss.

This inclusion acknowledges that unexpected events can significantly impact an individual's overall financial well-being and offers a structured mechanism through which individuals can proactively navigate such circumstances without resorting to draining their retirement savings or accumulating debt. The forthcoming changes to Secure Act 2.0 rules in 2024 aim to promote greater financial security and retirement preparedness for individuals.

By expanding catch-up contributions, implementing automatic enrollment in 401(k) plans and introducing emergency savings accounts, these reforms seek to address various challenges faced by workers when it comes to saving for retirement. These alterations recognize the evolving needs of individuals and reflect a commitment toward fostering a society where retirement is characterized by financial stability and peace of mind.

What are the changes to catch-up contributions?

Secure Act 2.0 brings notable changes to catch-up contributions, allowing individuals closer to retirement age to boost their retirement savings even further. Catch-up contributions are additional amounts that individuals aged 50 or over can contribute to their retirement accounts beyond the regular contribution limits.

These extra contributions serve as a valuable opportunity for those who may need to ramp up their savings in the final stages of their career. Currently, the catch-up contribution limit for certain retirement accounts, such as 401(k) plans and individual retirement accounts (IRAs), is set at $6,500 per year for individuals aged 50 and older. With Secure Act 2.0, this limit will be raised by $1,000 to reach a total of $7,500 per year.

This increase in catch-up contributions presents a significant advantage for those approaching retirement age as it allows them to make larger annual contributions toward their savings goals. Whether someone has fallen behind on their desired savings targets or simply wants to maximize their nest egg before they retire, this change offers an opportunity to accelerate their financial preparedness.

By expanding the limits of catch-up contributions in 2024, the Secure Act 2.0 is intended to provide individuals with increased flexibility and options when it comes to saving for retirement. Taking advantage of these higher limits can help older Americans bridge any potential gaps in their savings and ensure a more secure financial future during their golden years.

How does the automatic enrollment in 401(k) plans work?

Automatic enrollment in 401(k) plans is a powerful tool designed to encourage employees to save for retirement. Under the new changes to Secure Act 2.0 set to take effect in 2024, this provision will play an even more significant role in helping individuals secure their financial future. So, how does this automatic enrollment work?

When an employer adopts automatic enrollment, eligible employees are automatically enrolled in the company's 401(k) plan unless they choose to opt out. This means that instead of employees having to actively sign up for the plan, they are automatically enrolled without any effort on their part.

The default contribution rate is typically set at a specific percentage of the employee's salary, such as 3% or 6%, although employees can modify this amount. Once enrolled, employees will have funds deducted from their paychecks and contributed toward their retirement savings on a regular basis.

These contributions are made on a pre-tax basis, meaning that they are deducted from an employee's paycheck before taxes are calculated. This has the advantage of reducing an employee's taxable income while simultaneously building their retirement nest egg.

It is important to note that under Secure Act 2.0 changes, employers now have more flexibility in setting higher default contribution rates for automatic enrollment plans. This means that companies can now encourage employees to save more by defaulting them into higher contribution levels — such as starting at a default rate of 6% rather than the previous norm of around 3%.

Employers may also choose to implement automatic escalation features where contributions increase gradually over time unless participants actively change or opt out. By streamlining the process and eliminating potential barriers or inertia that may deter individuals from enrolling in retirement plans voluntarily, automatic enrollment helps promote widespread participation and long-term savings habits among employees.

It provides individuals with a valuable opportunity to start building their retirement savings without requiring them to take significant action or make complex decisions right from the beginning of their employment. With these changes, Secure Act 2.0 aims to further enhance the effectiveness of automatic enrollment in securing a prosperous retirement for more workers across the nation.

How will emergency savings accounts work?

jar of money labeled emergency

One of the notable changes introduced in Secure Act 2.0 for 2024 is the provision for emergency savings accounts. Recognizing the importance of having financial security, especially during unforeseen circumstances, this new feature aims to assist individuals in building a safety net for emergencies that may arise.

Emergency savings accounts will function as separate savings vehicles, distinct from traditional retirement accounts like 401(k)s or individual retirement accounts (IRAs). These accounts will allow individuals to contribute after-tax dollars and earn tax-free growth on their savings.

Similar to a Roth IRA, withdrawals from emergency savings accounts will generally be tax-free, provided certain criteria are met. To further encourage individuals to save for emergencies, Secure Act 2.0 offers various incentives and benefits.

First and foremost, contributions made to these accounts will not count toward the annual contribution limits of other retirement plans such as IRAs or employer-sponsored plans like 401(k)s. This means that individuals can prioritize both their long-term retirement goals and short-term financial security simultaneously.

Additionally, Secure Act 2.0 permits penalty-free withdrawals from emergency savings accounts prior to reaching the age of 59½. However, it's important to note that while these withdrawals can be made without incurring penalties, they should be solely used for qualifying emergency expenses such as medical bills or unforeseen job loss.

Withdrawals used for non-qualifying purposes may still subject the individual to income taxes. Overall, the introduction of emergency savings accounts through Secure Act 2.0 reflects a progressive approach toward holistic financial planning by acknowledging the need for immediate access to funds during emergencies without jeopardizing long-term retirement goals.

By incentivizing saving for unforeseen circumstances while offering tax advantages and flexibility in accessing these funds when needed most, this provision aims to provide individuals with greater peace of mind and financial stability throughout their lives.

What is the change with student loan payments?

One of the significant changes that will be implemented under Secure Act 2.0 in 2024 is the alteration of rules regarding student loan payments. This change aims to provide relief to individuals burdened by student loan debt while still ensuring their long-term financial security. Under the new provisions, individuals will have increased flexibility and options for managing their student loan payments in conjunction with retirement savings.

One key modification involves allowing employers to make matching contributions into retirement accounts, such as a 401(k) or an individual retirement account (IRA), based on an employee's student loan payments. This means that if an individual is repaying their student loans, they can still receive employer contributions toward their retirement savings.

By essentially treating student loan payments as qualifying contributions, this change encourages individuals to continue saving for retirement while simultaneously reducing their student loan debt. Additionally, Secure Act 2.0 introduces the concept of "student loan repayment assistance programs" sponsored by employers.

These programs enable employers to make direct contributions toward an employee's outstanding student loans, similar to how they would contribute to a retirement savings plan. These employer-sponsored initiatives aim to alleviate the financial strain caused by high levels of student debt and promote a balanced approach between saving for retirement and repaying educational loans.

Furthermore, another notable change focuses on how employers can facilitate employees' ability to save while managing their student loan obligations. The new provisions allow participants in employer-sponsored retirement plans, such as a 401(k), to make elective deferral contributions based on their total compensation after deducting qualifying amounts paid toward their student loans.

This empowers individuals with greater control over balancing savings for both short-term needs and long-term goals. Secure Act 2.0's changes regarding student loan payments provide relief and flexibility for individuals grappling with education-related debt burdens.

By introducing innovative strategies such as employer-matching contributions tied to monthly repayments and establishing employer-sponsored repayment assistance programs, the legislation encourages individuals to save for retirement while managing their student loans effectively. These changes offer a more comprehensive approach to financial planning, ensuring individuals can work towards both long-term retirement security and alleviating the weight of student loan obligations.

What is the age increase for required minimum distributions?

person looking over document on laptop

Another significant change coming with Secure Act 2.0 in 2024 is the increase in the age for required minimum distributions (RMDs).

Currently, individuals who have traditional IRAs or employer-sponsored retirement plans such as 401(k)s are required to start taking RMDs by April 1 of the year after they turn 72. However, with Secure Act 2.0, this age will be increased to 73 in 2024. (In 2033, the RMD age will increase to 75.)

This change aims to accommodate longer life expectancies and allow individuals more flexibility in managing their retirement savings. By increasing the age for RMDs, Secure Act 2.0 acknowledges that people are living healthier and longer lives than ever before.

It recognizes that delaying withdrawals from retirement accounts can benefit individuals by allowing their savings to potentially grow for a few extra years, resulting in a larger nest egg during retirement. This change also aligns with trends indicating that many people are choosing to work longer and delay full retirement.

It's important to note that this change only applies to those who turn 70½ after December 31, 2019. For individuals who turned or will turn this age before this date, the previous rules still apply — their RMDs must begin at age 72 according to regulations in 2023.

Additionally, it's crucial for individuals affected by these changes to consult with financial or tax professionals who can guide them on how best to navigate these adjustments and maximize their retirement savings potential.


The Secure Act 2.0 changes set to take effect in 2024 bring about significant developments to retirement savings and financial planning. The modifications to catch-up contributions will allow individuals aged 50 and above to accelerate their savings, providing a much-needed boost toward their retirement goals.

Furthermore, the automatic enrollment provisions in 401(k) plans aim to encourage more individuals to participate actively in securing their financial futures. The introduction of emergency savings accounts reflects a proactive approach toward addressing unforeseen financial hardships that can hinder retirement planning.

By enabling individuals to set aside funds specifically for emergencies, they can better navigate unexpected expenses without jeopardizing their long-term savings efforts. This provision offers peace of mind and promotes a more holistic approach to financial well-being.

Another notable change pertains to student loan payments. With the new regulations, employers will be allowed to contribute towards employees' student loans while still maintaining eligibility for tax benefits related to retirement plan contributions.

This synergy creates a win-win situation where employees can alleviate some of the burdens associated with student debt while still building their retirement nest egg. The increase in the age for required minimum distributions (RMD) from individual retirement accounts (IRA) and other qualified plans is yet another positive aspect of Secure Act 2.0 changes.

By extending the age at which individuals are mandated to start withdrawing funds from these accounts, retirees have more flexibility in managing their finances during their golden years.

The changes encourage increased participation in retirement savings programs through catch-up contributions and automatic enrollment provisions within 401(k) plans. The introduction of emergency savings accounts and flexible approaches toward student loan payments further enhance individuals' ability to achieve both short-term stability and long-term financial security simultaneously — a step forward toward creating a brighter future for all Americans as they embark on their well-deserved retirement journeys.

Alliance America can help

Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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