The SECURE Act 2.0 introduces several changes that can significantly impact retirement planning. Here are some of the key ways it affects retirement savings:

1. Required Minimum Distributions (RMDs): The age at which you must start taking RMDs from retirement accounts has been increased to 73 starting in 2023, and it will further increase to 75 in 2033[1]. This allows more time for your savings to grow tax-deferred.
   • Example: Jane is 72 years old in 2023. Under the new rules, she doesn’t need to start taking RMDs from her retirement accounts until she turns 73. This gives her an extra year for her investments to grow tax-deferred.
2. Catch-Up Contributions: Starting in 2025, individuals aged 60 to 63 can make higher catch-up contributions to their retirement plans[1]. This can help boost retirement savings during the final years of work.
   • Example: Starting in 2025, John, who is 61 years old, can contribute an additional amount to his 401(k) beyond the standard catch-up contribution limit. This allows him to save more aggressively as he approaches retirement.
3. Automatic Enrollment: Beginning in 2025, employers will be required to automatically enroll eligible employees in new 401(k) or 403(b) plans with a participation rate of at least 3%[2]. This aims to increase participation rates and help more workers save for retirement.
   • Example: Sarah’s new employer automatically enrolls her in the company’s 401(k) plan at a 3% contribution rate when she starts her job in 2025. This helps Sarah start saving for retirement without having to take any action herself.
4. Student Loan Matching: Employers can match student loan payments with contributions to the employee’s retirement plan[1]. This helps younger workers save for retirement while paying off student debt.
   • Example: Mark is paying off his student loans and his employer matches his student loan payments with contributions to his 401(k) plan. This means that while Mark is reducing his debt, he is also building his retirement savings.
5. Emergency Savings: Defined contribution retirement plans can add an emergency savings account associated with a Roth account[2]. This provides a safety net for unexpected expenses without tapping into retirement savings.
   • Example: Emily’s employer offers an emergency savings account linked to her Roth 401(k). She can contribute to this account and use the funds for unexpected expenses without having to withdraw from her retirement savings.
6. 529 Plan Rollovers: Starting in 2024, unused funds in 529 education savings plans can be rolled over into a Roth IRA for the beneficiary, subject to certain conditions[2]. This offers more flexibility in using education savings for retirement.
   • Example: Lisa has leftover funds in her 529 education savings plan after finishing college. Starting in 2024, she can roll over these unused funds into a Roth IRA, providing her with additional retirement savings.

These changes are designed to make it easier for people to save for retirement, provide more flexibility, and offer additional incentives for both employees and employers[2][1].

References
[1] SECURE 2.0: How Does it Affect Retirement Plans?
[2] SECURE 2.0 Act Summary: New Retirement Savings Changes to Know – Kiplinger