SECURE ACT 2.0- Your Retirement Plan is Still Getting Upgrads

The financial landscape is always shifting, and when it comes to saving for retirement, a little legislation can go a long way. For example, the SECURE Act 2.0 is a massive bill passed at the end of 2022 that, even now as we enter 2026, is still changing how your employer-sponsored retirement plans [like your 401(k) or 403(b)] will operate.

More than just the normal annual cost-of-living increases on contribution limits, there are still fundamental shifts that touch everyone, from the highest-paid executives to part-time staff, from someone starting their first job to those nearing retirement. Whether you're a high-income earner, planning your final savings push, or just starting out, here’s how this landmark act is shaking up the rules for your future.

High-Income Earners: The Mandatory Roth Shift

For years, many high-income earners have relied on tax-deferred (or pre-tax) contributions for their yearly savings, enjoying an immediate tax break on their contributions. The catch-up contribution, which is an extra amount allowed for those age 50 and older, offered another way to boost pre-tax savings. SECURE 2.0 changes this dramatically.

The most significant change for those in the high-earning bracket revolves around these catch-up contributions, and how they will be treated for tax purposes.

Who is Affected? Participants in 401(k) and 403(b) plans who are over age 50 AND whose prior year’s FICA wages (essentially, the wages reported on your W-2 for Social Security) exceeded $145,000 (this amount is indexed for inflation, but this was the 2023 threshold).
The Change: Beginning in 2026, if you fall into this high-earner category, any catch-up contributions you make must be designated as Roth (after-tax) contributions. You lose the option to make these additional savings on a tax-deferred basis.

This isn't necessarily a bad thing, but it shifts your tax planning as you won't get an income tax deduction on that extra catch-up amount in the year you contribute it.

However, because contributions are applied to a Roth 401 (k), the trade-off of tax-free growth is potentially huge: all the growth and eventual withdrawals from your Roth catch-up contributions in retirement would be 100% tax-free.

Plan Requirement: This essentially forces plan sponsors to offer a Roth option. Though it isn’t a legal requirement to offer Roth, if a plan doesn't offer Roth contributions, then high-income catch-up eligible participants cannot make catch-up contributions at all (unless the plan is amended to add the Roth feature).

This change means high earners need to carefully balance their tax strategy. Should you max out your pre-tax (traditional) contributions up to the regular limit, or shift more to Roth earlier in your career? Now, the choice for your age-50-plus catch-up amount is made for you—it's a guaranteed Roth contribution for most of your peak earning years.

Catch-Up Contributions Get a Supercharge: Ages 60-63

The law recognizes that many people are at their highest earning potential and most eager to save later in their careers. SECURE 2.0 provides an even bigger boost for a specific group of older savers.

The new “Super” catch-up is for workers who turn age 60, 61, 62, or 63 during the calendar year; a new, higher catch-up limit kicks in, which starts in 2025.

For those savers ages 60 to 63: Your catch-up limit is significantly increased to the greater of $10,000 or 150% of the standard catch-up limit. For 2025, this higher amount is expected to be approximately $11,250. It’s worth noting, though, that for those who are high-income earners, your ‘super catch-up’ contributions are still subject to the mandatory Roth application mentioned above.

If you are age 64 and beyond, the contribution limit reverts to the standard age 50+ catch-up limit.

This is a four-year window designed to give you a powerful final push toward retirement savings. If you've had a career break, are finished paying for a child's college, or simply feel behind, this four-year, super-sized contribution window provides a critical chance to significantly increase your nest egg before you leave the workforce.

Benefits for All Participants: Young and Not-Young

While the catch-up changes grab headlines, SECURE 2.0 introduces a host of provisions that benefit employees of all ages and income levels.

The most widely applicable change is the expanded availability of Roth options. Historically, only employee elective deferrals could be made on a Roth basis.

Roth contribution types are expected to be more common in retirement plans now that high-income earners are forced to make their catch-up contributions in this manner. If you are younger, even if you are not a high-income earner, in fact, more so if you’re in a lower tax bracket, you can potentially benefit greatly from the addition of a Roth contribution type.

Roth contributions, which are traditionally only an option for employee contributions, are now optional for Employer contribution types. Employers can now offer participants the choice to designate employer matching contributions and non-elective contributions as Roth (after-tax) contributions. If your plan adopts this, you can now have all money going into your 401(k) or 403(b)—your contributions and the company's match—be tax-free when you pull it out in retirement. This can be a huge benefit for younger workers or those who expect to be in a higher tax bracket later in life.

Additional Benefits for All Participants

Help for Those with Student Loans

SECURE 2.0 recognizes the burden of student loan debt, which often prevents workers from saving.

Student Loan Matching was made optional for Employers beginning in 2024; employers can now amend their plans to offer matching contributions based on an employee's qualified student loan payments. If your plan adopts this, you can pay down your student loan debt, and your employer will treat those loan payments as if they were retirement plan contributions, providing you with a matching contribution into your 401(k) or 403(b). You no longer have to choose between paying debt at the expense of getting a company match!

More Mandatory Automatic Enrollment

The goal of the Act is simple: get more people saving.

The SECURE Act 2.0 introduced Mandatory Auto-Enrollment (for new plans). For new 401(k) and 403(b) plans established after the law's enactment, employers must automatically enroll employees at a contribution rate between 3% and 10% of their pay, with automatic annual increases. While employees can still opt out, this "nudge" ensures that people start saving immediately. It's designed to close the gap for individuals who might not manually enroll on their own.

Part-Time Employee Access

The path to retirement savings is getting shorter for part-time workers.

With the passing of the SECURE Act 2.0, the rule that required long-term part-time employees to be eligible for 401(k) participation after three consecutive years of working at least 500 hours is reduced to two years, effective in 2025. This opens the door for retirement savings much sooner for a significant segment of the workforce.

Your Action Plan

Whether you are a high-income earner, a part-time worker, below 50, over 50, or even over 60. The changes in SECURE 2.0 are numerous, but the core message is that saving for retirement has become more accessible and flexible. Below is a chart to help you identify your action plan in light of these changes.

Your action plan should include the following:

Check Your Plan: Talk to your Human Resources department or plan administrator to find out which of the optional provisions—like Roth matching or student loan matching—your employer is adopting.
Review Your Tax Strategy: If you're a high-income earner over 50, prepare for your catch-up contributions to become Roth in 2026, and adjust your overall pre-tax/Roth mix accordingly.
Maximize the Super Catch-Up: If you are nearing or are in the age 60-63 window, plan to utilize the higher contribution limits to front-load your retirement savings.

By expanding access, increasing contribution limits for older savers, and adding Roth flexibility, the new rules give nearly everyone a better shot at a secure and comfortable retirement.

Would you like a professional opinion on how the SECURE Act 2.0 affects your retirement planning?

Written by: Justin Meyer

This commentary on this website reflects the personal opinions, viewpoints, and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.