The 401(k) Rules That Changed in 2025 That Most People Still Don't Know About

In 2022, Congress passed the Secure 2.0 Act, which affected many 401(k) rules the workers need to know about today. The Act mandated that certain 401(k) retirement plan changes would be made in stages, and 2025 and 2026 are when many of these new rules begin to take effect.

Many of these 401(k) changes did not get much fanfare or media coverage. Still, workers need to know about them because these changes will affect retirement timelines, 401(k) contribution limits, and even tax liability. Here are some of the biggest 401(k) rules that have changed that most people don't know about.

The automatic enrollment mandate

One of the biggest changes to 401(k)s under the Secure 2.0 Act is that employers are now required to automatically enroll their employees in a 401(k) plan. Employees must be enrolled with a contribution rate between 3% and 10%. The benefit of doing this is that many people will have retirement savings when they might not have completed this step otherwise. The drawback is that many people might not review or adjust their 401(k) contributions, since it's done for them. Additionally, people who do not want to be enrolled in a 401(k) plan must opt out.

Penalty-free emergency withdrawals

Before the Secure 2.0 Act, workers would be charged a 10% penalty for withdrawing money before age 59 and a half. However, the Secure 2.0 Act made it possible for 401(k) plan participants to withdraw up to $1,000 for emergencies. The emergencies must meet certain criteria, but they allow workers to access much-needed cash without worrying about early withdrawal penalties. Though this new rule allows penalty-free withdrawals in certain circumstances, the downside is that workers still lose out on potential long-term investment gains if they withdraw money.

The expanded catch-up contribution limits for workers ages 60–63

Under the Secure 2.0 Act, workers aged 60 to 63 receive higher catch-up contribution limits than workers aged 50 to 59. Workers aged 50 to 59 can contribute up to $8,000 extra per year in addition to 401(k) maximum limits. However, those between the ages of 60 and 63 can contribute an extra $11,250 to their 401(k) accounts. This enables many workers to top up their retirement accounts in the last few years before they stop working.

The Roth-only catch-up requirement for workers earning over $150,000

One of the Secure Act 2.0 changes that may impact people's tax strategy as they near retirement is that those who earn over $150,000 a year will only be able to make those catch-up contributions as Roth contributions. This has benefits and drawbacks for older workers. The drawback is that many high earners benefited from using catch-up contributions to reduce their taxable income, which isn't possible with Roth contributions. The benefit is that as long as they meet certain requirements, retirees can withdraw Roth contributions tax-free in retirement.

The new part-time employee 401(k) eligibility rules

Part-time workers gained additional benefits under the Secure 2.0 Act. Previously, part-time workers who worked 500+ hours over three consecutive years could get access to 401(k) plans. Now, the Secure 2.0 Act enables workers with 500+ hours over two consecutive years to contribute to a 401(k). This change creates broader access for many people who may not have had the opportunity to contribute to a retirement account previously.

Increasing the RMD age

The Secure 2.0 Act also impacted retirees and their withdrawal strategy. For example, the Act increased the required minimum distribution (RMD) age to 73 as of 2023. It will rise again to age 75 in 2033. This gives 401(k) accounts extra time to grow before retirees are required to withdraw funds. However, retirees still need to make a plan for their withdrawal strategy and time their first RMD carefully.

The elimination of RMDs from Roth 401(k) accounts

Finally, one of the biggest changes that came with the Secure 2.0 Act is that it eliminated RMDs from Roth 401(k) accounts. Before the Secure Act 2.0, Roth 401(k)s had RMDs just like traditional 401(k)s. Now, Roth 401(k)s do not have RMDs. That means workers who previously rolled Roth 401(k)s into Roth IRAs no longer have to do so to get the same benefits.

Bottom line

Many of the Secure 2.0 Act's changes were introduced to give more people access to 401(k)s and, by extension, the possibility of a stress-free retirement one day. The Secure 2.0 Act has helped more people enroll in 401(k) plans, including part-time workers. It also raises the contribution limits and delayed RMDs. Overall, the goal of these policy changes was to help Americans better prepare for their future retirement years.

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