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6 types of people impacted by SECURE 2.0 Act

SECURE 2.0 is a bevy of new retirement rules that aim to help people reach their savings goals and have more flexibility upon retirement. Signed into law in December 2022, SECURE 2.0 legislation affects millions of Americans from young to old. Will SECURE 2.0 impact you? Check out these six types of people who can benefit from the new rules of SECURE 2.0.

1. Workers 50 years and up who are still saving

Catch-up contributions allow older workers to make additional 401(k) contributions and save more for retirement. Under current law, employees who are 50 years old or older can put an extra $6,500 annually in their employer’s retirement plan.

SECURE 2.0 is increasing the limit to $10,000 in 2025 for employees ages 60–63. The increased contribution amount will also be indexed for inflation.1 This increased catch-up contribution limit is a big win for workers who need additional savings.

2. High-net-worth retirees 

A required minimum distribution (RMD) is the amount of money that a retirement plan owner must withdraw annually. Effective January 1, 2023, SECURE 2.0 increased the age when individuals must begin taking RMDs from traditional IRAs and workplace retirement plans from 72 to 73. In 2033, the age will increase again to 75.2

This is a benefit for high-net-worth savers who can afford to not tap into these funds to cover their expenses.  With extra years before their RMDs kick in, they can make their savings last longer and grow more.

3. Lower- and middle-income workers

The Savers Credit, which gives special tax breaks to low- and middle-income workers who are saving for retirement, is being replaced by a Saver’s Match in 2027. The Saver’s Match is a federal matching contribution that will equal up to 50% of the first $2,000 contributed by an individual into a retirement account each year (or up to $1,000). Matches will be deposited into savers’ traditional retirement accounts.3

In addition, in 2024, workers will have more options for saving for emergency expenses. At this time, companies will be able to let non-highly compensated workers set up an emergency savings account through automatic payroll deduction, with an annual cap of $2,500.4 This will help Americans avoid tapping into their long-term retirement savings for emergencies.

Another SECURE 2.0 change will allow workers to withdraw $1,000 from their retirement accounts for emergency expenses without having to pay the usual 10% early-withdrawal tax penalty. However, the borrower will have to replace those funds within the following three years before making another similar withdrawal.5

4. Part-time workers

Many part-time workers don’t have access to employer-sponsored 401(k)s, limiting how much they can save and barring them from employer matches. But the SECURE Acts are giving part-time workers more access. Here’s how:

  • The SECURE Act of 2019 required employers to permit employees to participate in their workplace retirement plans once they’ve completed at least one year of service in which they worked at least 1,000 hours, or three consecutive years of service in which they worked at least 500 hours each.
  • SECURE 2.0 improves this by dropping the second requirement from three years of service to two beginning in 2025.6

5. Student loan borrowers

Student loans are a burden for millions of Americans, but SECURE 2.0 could help many by allowing employers to make contributions to workplace retirement savings plans on behalf of employees who are repaying student loans. Going into effect in 2023, this new rule says employer retirement plan contributions can match the amount of student loan debt repaid by the individual worker each year.7

6. Parents saving for college 

529 savings plans are great tools for parents who are saving for their children’s future college tuition, but they have strict rules limiting funds to qualified educational expenses. Under current law, if a child decides to not go to college, the parent must pass the money to another beneficiary for education expenses, or withdraw the money for nonqualified expenses, resulting in a 10% penalty on earnings and income taxes.

But SECURE 2.0 changes that in 2024 with another option that allows leftover balances of up to $35,000 to be rolled tax- and penalty-free into Roth IRAs that have been open for at least 15 years.8 Some financial experts are calling this a “Backdoor” Child IRA that allows parents and grandparents to shift wealth from one generation to another.

We’re here for you!

These are just a few types of people who can benefit from SECURE 2.0. There are many more changes that will impact workers and retirees. Updates to the law may require you to revisit your contribution and withdrawal strategies or change your estate planning strategy. It’s important to talk to someone who’s up to speed on SECURE 2.0 so you can take advantage. Bankers Life investment professionals are here to help! To get started, contact us today, and a local Financial Representative will reach out to you.

1United States Senate Committee On Finance, SECURE 2.0 Act of 2022,, 2022, p. 2.
3Ibid., p. 1.
4Ibid., p. 7.
Ibid., p. 4.
6Ibid., p. 6.
7Ibid., p. 3.
8Ibid., p. 6.