The SECURE 2.0 Act is the December 2022 federal law that rewrote dozens of retirement plan rules, and 2026 is the year several of its biggest changes land at once. For most savers, the SECURE 2.0 Act and what it means for retirement saving comes down to five things this year: higher-paid workers must make 401(k) catch-up contributions as Roth, people aged 60 to 63 get a larger catch-up, new 401(k) plans must auto-enroll workers, required minimum distributions now start at 73, and unused 529 money can move into a Roth IRA.
Employers face their own changes under the SECURE 2.0 Act, from payroll systems that test prior-year wages to small employer tax credits that can fund most of a new plan's first years. This guide covers what applies in 2026, with a worked example for an employee and a small employer.
SECURE 2.0 is Division T of the Consolidated Appropriations Act, 2023, which became Public Law 117-328 on December 29, 2022. It followed the original SECURE Act of 2019. Its sections carry their own effective dates, so the law has been phasing in for four years and still has dates ahead of it, including the Saver's Match in 2027 and the RMD age of 75 in 2033.
The most important recent IRS guidance is the set of final catch-up regulations released in September 2025. If you work with a CPA on retirement planning, 2026 is a good year to review contribution elections and withholding together.
The IRS announced the 2026 figures in IR-2025-111 on November 13, 2025.
| Limit (2026) | Amount | 2025 amount |
|---|---|---|
| 401(k), 403(b), governmental 457 and TSP employee deferral | $24,500 | $23,500 |
| Catch-up, age 50 and over | $8,000 | $7,500 |
| Super catch-up, ages 60 to 63 | $11,250 | $11,250 |
| IRA contribution | $7,500 | $7,000 |
| IRA catch-up, age 50 and over (now indexed) | $1,100 | $1,000 |
| SIMPLE plan deferral | $17,000 | $16,500 |
| SIMPLE catch-up, age 50 and over | $4,000 | $3,500 |
| SIMPLE super catch-up, ages 60 to 63 | $5,250 | $5,250 |
| Roth catch-up wage threshold (2025 wages, applied to 2026) | $150,000 | $145,000 |
SECURE 2.0 indexed the IRA catch-up, which had been frozen at $1,000; 2026 is the first year it moved. The full set of cost-of-living figures is in Notice 2025-67.
Section 603 of SECURE 2.0 says that if a participant's wages from the plan sponsor for the preceding calendar year exceed the threshold, catch-up contributions are allowed only as designated Roth contributions. The statute defines wages by reference to section 3121(a) (FICA wages), and the dollar figure is indexed. Notice 2025-67 states that the threshold for 2025 wages, which decides whether 2026 catch-ups must be Roth, rose from $145,000 to $150,000.
IRS Notice 2023-62 gave plans an administrative transition period. According to IR-2025-91, that transition period generally ended on December 31, 2025, and was not extended. The final regulations themselves generally apply to contributions in taxable years beginning after December 31, 2026, with later dates for some governmental and collectively bargained plans. For 2026, plans must apply the rule, and they may do so using a reasonable, good faith interpretation of the statute.
The test uses wages from the employer sponsoring the plan, so a new hire with no 2025 wages from that employer is generally outside it, as are self-employed people with no FICA wages. If a plan has no Roth option, participants above the threshold cannot make catch-up contributions at all.
Our separate guide to the $150,000 wage test for mandatory Roth catch-ups covers deemed Roth elections, payroll setup and corrections in depth.
SECURE 2.0 created a higher catch-up limit for employees who reach age 60, 61, 62 or 63 during the year. For 2026 it stays at $11,250 in 401(k), 403(b), governmental 457 plans and the TSP, compared with $8,000 for everyone else aged 50 or over. A participant in that age band can defer up to $35,750 in 2026 ($24,500 plus $11,250). SIMPLE plan participants in the same age band get $5,250 instead of $4,000.
In the year a person turns 64, the catch-up drops back to $8,000. Plans must turn the feature on, so check the plan document and payroll settings. It is also subject to the Roth rule: a 61-year-old with 2025 FICA wages above $150,000 must make the full $11,250 as Roth.
New section 414A of the Internal Revenue Code requires 401(k) and 403(b) arrangements to automatically enroll eligible employees for plan years beginning after December 31, 2024. The starting rate must be at least 3% and no more than 10% of pay, and it rises by one percentage point each year until it reaches at least 10% (capped at 15%). Employees can opt out or pick a different rate.
The mandate has wide exceptions. It does not apply to:
Separately, from 2025 long-term part-time workers become eligible to make deferrals after two consecutive 12-month periods with at least 500 hours of service each, down from three under the 2019 law. Both rules depend on clean hours and hire-date data, so treat them as a payroll compliance task.
Section 107 replaced the old age 72 with an "applicable age." For people who reach 72 after December 31, 2022 and 73 before January 1, 2033, the applicable age is 73. For people who reach 74 after December 31, 2032, it is 75. In birth-year terms, the July 2024 final IRS regulations set the applicable age at 73 for people born from 1951 to 1958 and 75 for people born in 1960 or later. The statute's wording overlaps for people born in 1959; the final regulations reserve that year, and proposed regulations issued alongside them would set it at 73.
The IRS RMD guidance confirms that IRA owners must take the first RMD by April 1 of the year after they reach 73, and that designated Roth accounts in 401(k) and 403(b) plans no longer require lifetime distributions. A missed RMD now triggers a 25% excise tax on the shortfall, reduced to 10% if the missed amount is withdrawn within two years, reported on Form 5329 for additional taxes on retirement accounts.
For IRA owners aged 70½ or older, a qualified charitable distribution counts toward the RMD and stays out of adjusted gross income.
Since 2024, a 529 beneficiary can roll leftover education savings into a Roth IRA in their own name. IRS Publication 590-A lists the conditions:
At $7,500 a year, moving the full $35,000 takes at least five years, so families with a large 529 balance should plan the sequence early. Track basis carefully on Form 8606 for Roth and nondeductible IRA reporting, since mistakes there follow the account for years.
SECURE 2.0 made SIMPLE plans more generous. Employers with 25 or fewer employees who earned at least $5,000 get a higher deferral limit automatically ($18,100 for 2026), and employers with 26 to 100 employees can elect it if they raise the employer match from 3% to 4% or the nonelective contribution from 2% to 3%. Section 116 also lets SIMPLE sponsors add a nonelective contribution of up to 10% of pay, capped per employee at an indexed amount ($5,300 for 2026 under Notice 2025-67). SIMPLE IRAs and SEPs can now accept Roth contributions, and section 604 lets 401(k), 403(b) and governmental 457(b) plans offer employer matching or nonelective contributions as Roth at the employee's election, taxable to the employee when made. For a side-by-side look at both small plan types, see SEP IRA vs SIMPLE IRA.
The Saver's Match arrives for taxable years beginning after December 31, 2026. It works differently from today's Saver's Credit, which reduces tax owed. The match is a federal contribution deposited into the person's retirement account: 50% of up to $2,000 of qualified contributions, so a maximum of $1,000 per person. The statute phases the match out starting at $41,000 of modified AGI for joint filers over a $30,000 range, with those amounts indexed. Until 2027, the existing Saver's Credit still applies; for 2026 its income limit is $80,500 for joint filers.
The IRS startup credit page and the Instructions for Form 8881 describe three credits:
You cannot deduct expenses you claim a credit for, and employer contribution deductions are reduced by the credit. These credits are part of the general business credit, so they flow through Form 3800.
Both cases are illustrative.
The employee. Priya turns 61 in 2026. Her 2025 FICA wages from her employer were $180,000, above the $150,000 threshold. She can defer up to $35,750 in 2026:
If her combined marginal rate is 32% (an illustrative assumption), making the catch-up as Roth instead of pre-tax raises her 2026 tax by $11,250 x 32% = $3,600. In exchange, qualified withdrawals of that money and its growth will be tax-free. Her colleague Marcus, 55, earned $120,000 in 2025. He can defer $32,500 ($24,500 plus $8,000), all pre-tax if he wants.
The small employer. Lakeside Dental has operated for six years and has 14 employees who each earned at least $5,000, including 12 non-highly compensated employees with 2026 wages under the $110,000 cap. It starts a new 401(k) in 2026. Because the plan is new, the employer is older than three years and it has more than 10 employees, the plan must include automatic enrollment.
| Credit (illustrative) | Calculation | Amount |
|---|---|---|
| Startup cost credit, year 1 | $3,800 of costs; cap is greater of $500 or lesser of 12 x $250 = $3,000 and $5,000 | $3,000 |
| Auto-enrollment credit, year 1 | Flat amount | $500 |
| Employer contribution credit, year 1 | 3% nonelective contribution averaging $1,800 for 12 employees; 100% x $1,000 cap x 12 | $12,000 |
| Year 1 total | $15,500 |
Lakeside's year-one employer contributions total $21,600 (12 x $1,800). Over five years at the same headcount and contribution level, the contribution credit totals $12,000 + $12,000 + $9,000 + $6,000 + $3,000 = $42,000. Lakeside must reduce its deduction for employer contributions by the credit claimed, and it cannot also deduct the $3,000 of startup costs covered by the credit.
Employers should confirm that payroll can pull each participant's prior-year box 3 wages and route catch-ups above $150,000 to Roth, test the age 60 to 63 logic, verify auto-enrollment rates on any plan started after December 29, 2022, track part-time hours, and claim Form 8881 credits for each eligible year. If payroll is outsourced, our comparison of outsourced payroll companies is a starting point for reviewing providers.
High earners aged 50 or over should expect catch-ups to show as Roth on late 2026 paystubs. Business owners wanting more after-tax room can compare Roth solo 401(k) contribution limits with the mega backdoor Roth for high earners. Anyone turning 73 in 2026 should decide whether to take the first RMD by December 31 or wait until April 1, 2027, which means two distributions in 2027.
Which SECURE 2.0 Act changes matter most in 2026? The end of the IRS transition period for Roth catch-ups by higher earners, the $11,250 limit for ages 60 to 63, auto-enrollment for 401(k) and 403(b) plans started after December 29, 2022, RMDs at 73, and 529-to-Roth rollovers of up to $7,500 a year.
What are the 2026 catch-up limits? $8,000 for people aged 50 and over in 401(k), 403(b), governmental 457 plans and the TSP, and $11,250 for people who turn 60, 61, 62 or 63 during 2026. The IRA catch-up is $1,100.
What is the RMD age under the SECURE 2.0 Act? It is 73 for people born from 1951 to 1958 and 75 for people born in 1960 or later. For 1959 births, proposed IRS regulations would set it at 73. The penalty for a missed RMD is 25% of the shortfall, or 10% if corrected in time.
Do existing 401(k) plans have to add automatic enrollment? No. Plans established before December 29, 2022 are exempt, as are businesses under 3 years old, employers with 10 or fewer employees, SIMPLE 401(k)s, and governmental and church plans.
When does the Saver's Match start? For taxable years beginning after December 31, 2026, so the first matches relate to 2027 contributions. It deposits 50% of up to $2,000 of contributions into the saver's account, subject to income phaseouts.
Madras Accountancy supports businesses and CPA firms with bookkeeping, payroll processing, tax preparation and CFO-level advisory work, including the records that sit behind retirement plan contributions and small employer credits. To talk through your 2026 setup, contact our team.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
