Retirement · May 6, 2020

What the SECURE Act and SECURE 2.0 mean for your retirement

By Melissa Guy

The original SECURE Act of 2019 made it easier for small businesses to offer retirement plans and pushed back the age for required minimum distributions. SECURE 2.0, enacted 29 December 2022 as Division T of the Consolidated Appropriations Act, 2023, went further. Some of the 2019 rules are still in force. Others have already been updated. If you last looked at this in 2020, the required beginning age and the startup credits are not what they were.

This is a plain-English briefing for owners, not a plan document. Plan terms and your own facts control. For current figures, start with the IRS pages cited below.

Retirement plans are easier for small businesses to offer

The 2019 law let unrelated small businesses join a multiple-employer or pooled plan so they could offer 401(k) coverage without each firm standing up a plan alone. It also stopped a compliance failure at one participating employer from automatically punishing the whole group. That structure is still the point: you do not have to wait until you find another company in the same industry.

If you have not offered a plan because administration looked too expensive, look at the credits below before you decide it is out of reach.

Long-term part-time employees and 401(k) eligibility

If you already offer a 401(k) to full-time staff, you also have to let certain part-time employees defer.

Under the original SECURE Act, a plan generally could not make an employee wait longer than the earlier of one year of service, or three consecutive 12-month periods with at least 500 hours of service in each (periods beginning before 2021 could be ignored).
For plan years beginning after 31 December 2024, SECURE 2.0 shortened that 500-hour test from three consecutive years to two. See IRS Publication 560 (2025).

In other words, if you offer 401(k) deferrals to full-time employees, review who among your part-time and gig-adjacent staff now has to be let in. A plan administrator should apply this to your document; do not guess from a blog post.

The startup-cost credit is larger than it was in 2020

Eligible small employers can still claim a credit for ordinary costs of starting and administering a SEP, SIMPLE IRA, or qualified plan such as a 401(k), including employee education about the plan. You claim it on Form 8881. You cannot deduct the same startup costs and also take the credit.

The 2019 law raised the cap. SECURE 2.0 raised the percentage for the smallest firms. Per the IRS startup-costs credit page and the December 2025 Form 8881 instructions:

Eligible employers generally had 100 or fewer employees who received at least $5,000 of compensation in the preceding year, plus other tests on the form.
For tax years beginning after 2022, employers with 1–50 such employees may take 100% of qualified startup costs, subject to the limit.
Employers with 51–100 such employees remain at 50%, subject to the same limit.
The credit is limited to the greater of $500, or the lesser of $250 times the number of eligible non-highly compensated employees or $5,000, and it is available for the first credit year and the next two years.

There is a separate $500-per-year, three-year auto-enrollment credit under section 45T when an eligible employer includes an eligible automatic contribution arrangement in a qualified plan — new or existing. SECURE 2.0 also added a credit for certain employer contributions (up to $1,000 per employee, at a declining percentage over five years) and a military-spouse participation credit. Details and the $100,000 compensation cutoff for the contributions credit are on the same IRS startup-credit page. Have your tax preparer apply the form, not a blog summary.

IRS Publication 560 (2025) also notes that, subject to exceptions, 401(k) and 403(b) plans established on or after 29 December 2022 generally must auto-enroll eligible employees for plan years beginning after 2024, with an opt-out.

Required minimum distributions now generally start at 73

This is the fact that dated the old version of this article. The 2019 law moved the required beginning age from 70½ to 72. SECURE 2.0 moved it again.

The IRS now says you generally must start required minimum distributions from a traditional IRA, SEP IRA, SIMPLE IRA, or workplace plan when you reach age 73. See Retirement topics — Required minimum distributions and the RMD FAQs.

In outline:

For IRAs (including SEPs and SIMPLE IRAs), the first RMD is due by 1 April of the year after you reach 73.
For a 401(k), profit-sharing, 403(b), or similar defined-contribution plan, it is generally 1 April following the later of the year you reach 73 or the year you retire, if the plan allows the delay — unless plan terms or 5% owner rules require an earlier start.
Later RMDs are due by 31 December. If you delay the first one to 1 April, you will usually have two distributions in that calendar year.
You are not required to take lifetime RMDs from a Roth IRA, or from a designated Roth account in a 401(k) or 403(b), while the original owner is alive. Beneficiaries are still subject to RMD rules.
If you miss an RMD, the excise tax is generally 25% of the amount not distributed as required, or 10% if it is withdrawn within two years. That is also on the IRS RMD topic page. Report it on Form 5329 when required.

IRS Notice 2023-54 explains that SECURE 2.0 defines the required beginning date by reference to an "applicable age," which is 73 or 75 depending on date of birth. Current IRS RMD topic pages, and Publication 590-B (2025) as retrieved on 12 November 2026, describe the starting age as 73. If your birth year may fall under the later age, confirm it with the IRS pages or your advisor before you delay a withdrawal.

Traditional IRA contributions no longer have a maximum age

The 2019 law removed the old age cap on traditional IRA contributions. You can still contribute after the former cutoff if you have eligible compensation and otherwise qualify. Contribution limits change with inflation; for 2026 the IRS announced a $7,500 IRA limit and a $1,100 catch-up at age 50 or over. See the IRS 2026 retirement-plan limit newsroom release. Those dollar amounts will move again. Use the year that applies to the contribution.

What to do with this

If you already sponsor a plan, have someone review part-time eligibility, auto-enrollment, and the credits you may still be able to claim. If you do not, the credit structure is more generous for the smallest firms than it was when this article first ran.

For help with the tax side of a plan, a notice, or the file behind the return, start at Taxes or contact us. If a letter from the IRS is already on the desk, see What to do if the IRS audits you.

Fifteen minutes is free. Call (844) 222-9653, or start at unchainedfs.com.

Sources

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