In late December, Congress passed a $1.7 trillion spending bill to keep the government funded through September. Included in that bill, now signed into law by President Biden, was a package of retirement-related reforms collectively known as the SECURE 2.0 Act.

SECURE 2.0 builds on the original SECURE Act from 2019, which aimed to improve access to retirement savings for all Americans.

There are nearly 100 provisions in SECURE 2.0. While most of them aren’t particular to public defined benefit plans like Colorado PERA, many of them could affect public sector workers and retirees who have money saved in a defined contribution account like a 401(k) or 457 plan.

Here are some of the major provisions included in the legislation and what they mean.

Automatic enrollment in 401(k) plans

One of the biggest changes resulting from SECURE 2.0 will be automatically enrolling workers in their employer’s 401(k) plan starting in 2025. Unless they opt out, eligible employees will automatically contribute at least 3 percent of each paycheck to their retirement account, and that amount will increase by 1 percent each year until it reaches at least 10 percent (but not more than 15 percent). The mandatory 401(k) auto-enrollment provision will not apply to government plans like Colorado PERA.

Student loan matching on retirement accounts

This provision is aimed at people who aren’t saving for retirement because they’re paying off student loans and can’t afford both. Beginning in 2024, employers will be allowed to match a worker’s student loan payments and deposit that money into their 401(k) or 457 plan account.

Emergency savings accounts

Many Americans lack a dedicated savings account for emergency expenses and often end up tapping into their retirement savings to pay for unexpected costs. Under this provision, employers will be able (but not required) to automatically enroll workers in an emergency savings plan, with employees contributing no more than 3 percent of their salary on a Roth basis. The first four withdrawals from the account each year will be exempt from any fees or charges solely on the basis of such withdrawals.

Changes to required minimum distributions (RMDs)

Under current law, retirees are required to start taking withdrawals (required minimum distributions, or RMDs) from retirement accounts like 401(k)s when they reach a certain age. The previous SECURE Act raised that age to 72 in 2019. SECURE 2.0 raises the age to 73 as of Jan. 1, 2023 (retirees who turned 72 in 2022 and already began taking RMDs will need to continue taking their RMDs). The RMD age will then rise to 75 in 2033. SECURE 2.0 also reduces the penalty for failing to take RMDs from 50 percent to 25 percent.

New allowable distributions

Several provisions of SECURE 2.0 lay out new circumstances under which a person can withdraw money from their retirement account(s) before they’re retired without facing a penalty. The new rules allow for penalty-free withdrawals for personal or family emergencies (one distribution up to $1,000 per year), in domestic abuse cases (the lesser of $10,000, indexed for inflation, or 50 percent of the participant’s account), to pay for long-term care insurance (up to $2,500 per year) and for terminally ill patients.

Retirement account lost-and-found

For workers who have held multiple jobs throughout their careers and left behind retirement accounts, it can be a challenge to find and claim those old accounts. It can be similarly difficult for plan administrators to find account holders who may have moved or changed names. This provision creates a nationwide database of retirement plans under the Department of Labor, allowing account holders to more easily find the contact information for plan administrators and claim their old accounts.

Click here for a more detailed section-by-section explanation of each of the provisions in SECURE 2.0.