SECURE 2.0 Act Resources for Employers
When Congress passed the SECURE 2.0 Act in 2022, it expanded on the original 2019 SECURE Act to further enhance retirement savings opportunities. Its goal is to encourage workers to save for retirement by making it easier to participate and by providing incentives to boost retirement savings. While there are many provisions of the act, two key provisions impacting PERA-covered employers become effective in 2025 and 2026:
- Section 109: Effective January 1, 2025, catch-up contribution limits will increase for employees aged 60–63 to the greater of $10,000 or 150% of the standard catch-up limit. For 2025, the limit is $11,250. Employees aged 50-59 in 2025 will still have the current catch-up limit of $7,500. (Note that this does not change the special catch-up provisions available in the 457 Plan.)
- Section 603: Starting January 1, 2026, employees paying into Social Security who are making catch-up contributions and earning $145,000 per year or more must make catch-up contributions on a Roth (post-tax) basis. Recent clarification from the Dept. of Labor narrowed the application of this provision only to employers who pay into Social Security. If you do not withhold Social Security for your employees, then this provision does not apply to you. If you do withhold Social Security for your employees, you will be required to offer the Roth option.
