Secure Act 2.0: New RMD Age, Penalties & Catch‑Up Rules

1. RMD Age Rose to 73 in 2023 and will be age 75 in 2033

   Old rule: Start required minimum distributions (RMDs) at age 72.
   New rule (2023): You can wait until age 73.
   Future rule: RMDs begin at 75 in 2033.
   Why it matters: More time for tax-deferred growth and proactive Roth conversions.

2. Penalties Drop—Plus a New Correction Window

   Missing an RMD used to cost 50 % of the amount you should have taken. The penalty is now 25 %, and only 10 % if you fix the mistake during the IRS “correction window.”

3. Roth IRA RMDs Eliminated for Many Plans

   Starting in 2024, workplace Roth 401(k) and Roth 403(b) accounts will no longer require RMDs—just like Roth IRAs.

4. Bigger Catch-Up Contributions

   Age Account 2024 Limit 2025 & Beyond
   60-63 401(k)/403(b) $7,500 $11,250 (indexed for inflation)
   50 + IRA $1,000 $1000 (Indexed for inflation

5. New Plan Auto-Enrollment & Part-Time Access

   Most new 401(k) and 403(b) plans launched after 2024 must automatically enroll eligible employees at 3–10 % of pay, with automatic escalation. Long-term part-time workers become eligible after two consecutive years of 500 hours of service instead of three.

6. Student-Loan Match Contributions (2024)

   Beginning in 2024, employers may treat employees’ student-loan payments as elective deferrals and match them in the retirement plan—great news if debt has crowded out saving.

7. 529-to-Roth IRA Transfers (Lifetime $ 35k)

   Have leftover money in a 529 college plan? You can transfer up to $35,000 into the beneficiary’s Roth IRA—tax- and penalty-free—if the account is at least 15 years old and other conditions are met. Transfers cannot exceed the annual contribution limit for that year and count towards the maximum allowed per year.

8. $1,000 Penalty-Free Emergency Withdrawals

   Participants may take one self-certified emergency withdrawal of up to $1,000 per year without the 10 % early-distribution penalty. If the withdrawal isn’t repaid, you must wait three years for the next one. Withdrawals are still considered taxable income in the year they are taken.

9. Why These Changes Matter for Your Plan

   Tax flexibility: Delaying RMDs and new Roth options can lower lifetime taxes.
   Penalty relief: Honest mistakes sting less.
   Automatic savings: Auto-enrollment nudges new workers to save.
   Debt relief plus savings: Student-loan matches build balances faster.
   Education money rescue: 529 transfers keep excess college funds working for retirement.
   Rainy-day access: Emergency withdrawals add short-term cushion.

Next Steps

Curious how Secure Act 2.0 reshapes your retirement? Book a free 30-minute introductory call to see whether we’re the right fit.

Frequently Asked Questions — Secure Act 2.0

Q: I turn 73 this year. When is my first RMD actually due?

A: Your first required minimum distribution must be taken by April 1 of the year after you reach age 73. Every RMD after that is due by December 31 of the calendar year. Remember, if you delay your first RMD to April 1, 2025, you'll need to take 2 RMDs in 1 tax year: Your first by April 1, 2025, which satisfies your required withdrawal for 2024, and your second by December 31, 2025, which satisfies your required withdrawal for 2025.

Q: How does the new “correction window” for missed RMDs work?

A: If you miss all or part of an RMD, you generally have until the end of the second following tax year—or when the IRS assesses tax—to withdraw the shortfall. Do it in that window and the penalty drops to 10 % instead of 25 %.

Q: Will my 401(k) automatically enroll new hires now?

A: For plans created after 2024, Secure 2.0 requires automatic enrollment at 3–10 % of pay (with 1 % annual escalation to at least 10 % and no more than 15 %). Existing plans are grandfathered unless substantially changed.

Q: Can my student-loan payments really trigger an employer match?

A: Yes—starting in 2024. If your employer adopts the provision, any qualifying student-loan payment can be treated like an elective deferral, so the company match goes into your retirement plan even if you can’t contribute cash yourself.

Q: What rules govern transferring 529 funds into a Roth IRA?

A: The 529 must be at least 15 years old, the rollover counts toward the beneficiary’s annual Roth contribution limit, and the lifetime maximum you can transfer is $35,000. The account owner must have at least matching earned income in the year of the transfer to qualify.

Q: Is the $1 k emergency withdrawal in addition to hardship rules?

A: Yes. Each participant may take one penalty-free “emergency personal expense” withdrawal of up to $1,000 per year. If you don’t repay or contribute at least that amount within three years, you must wait three more years for another emergency withdrawal.

Q: Do catch-up contributions have to be Roth after 2025?

A: If you earn more than $145,000 (indexed) in W-2 wages, any 401(k)/403(b) catch-up contribution you make beginning in 2026 must go into the plan’s Roth source. Lower-income participants can still choose pre-tax or Roth.

Sources:

https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000
https://www.finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf

Disclosures:

Fortress Financial Group LLC (“FFG") is a registered investment advisor. Advisory services are only offered to clients or prospective clients where FFG and its representatives are properly licensed or exempt from licensure. For additional information, please visit our website at https://fortressfg.net/. For current FFG information, please visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with FFG’s CRD# 315329.