The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act was signed into law Dec. 29, 2022, building on the original SECURE Act of 2019. The law introduced a wide range of changes designed to help more Americans save for retirement earlier and with greater flexibility. Several of its most important provisions are now in effect, reshaping how workplace retirement plans operate and expanding the savings tools available to you.
Whether you’re just getting started with a new employer or looking to accelerate your savings in the years before retirement, understanding what’s changed — and how to take advantage of it — can make a meaningful difference in your financial plan.
Automatic enrollment in new retirement plans
One of the most visible changes affects newly established workplace retirement plans. Under the SECURE 2.0 Act, 401(k) and 403(b) plans set up after Dec. 29, 2022, are required to automatically enroll eligible employees (as of the beginning of the 2025 plan year.) If your employer launched a new retirement plan after that date, there’s a good chance you’ve already been enrolled, even if you haven’t made a contribution election.
The law sets a minimum initial contribution rate of 3% of your pay, with automatic annual increases of one percentage point each year until you reach at least 10%, but no more than 15%, of your income. You can always opt out of automatic enrollment or adjust your contribution rate, but the default is designed to make saving the path of least resistance.
Plans created before Dec. 29, 2022, are not affected by this requirement. Certain plans are also exempt from the mandate: employers with 10 or fewer employees, businesses that have been in operation for fewer than three years, church plans, governmental plans, and SIMPLE 401(k) plans.
Emergency savings accounts linked to your retirement plan
If you’ve ever avoided contributing to a 401k plan because you were worried about needing the money for an unexpected expense, SECURE 2.0 introduced a tool that may help. It’s called the pension-linked emergency savings account, or PLESA.
A PLESA is an optional feature that employers may choose to add to their defined contribution plans for plan years beginning after Dec. 31, 2023.1 If your employer offers one, you can contribute up to $2,500 per year (or a lower amount set by your employer) to a dedicated Roth emergency savings account linked to your existing retirement plan. Contributions are made on an after-tax basis, and the first four withdrawals you take from the account in any given year are not subject to fees or charges based solely on making the withdrawal.
Importantly, contributions you make to a PLESA count toward the overall 401(k) elective deferral limit ($24,500 for 2026). When your PLESA balance reaches the cap, any additional contributions can be redirected into your Roth defined contribution account. If your employer offers a matching contribution on your 401(k) deferrals, that match amount also applies to your PLESA contributions.
Eligibility for a PLESA is limited to non-highly compensated employees, which are defined as employees earning less than $160,000 per year in 2026. If you qualify and your employer has adopted this feature, a PLESA can give you a meaningful way to build a short-term financial cushion without sacrificing your long-term retirement savings momentum.
New catch-up contributions for ages 60 to 63
If you’re approaching retirement, a new opportunity is available to you through SECURE 2.0 that accelerates your savings. Beginning in 2025, employees who turn ages 60, 61, 62, or 63 in a given calendar year are eligible for an enhanced “super catch-up” contribution limit in 401(k), 403(b), and governmental 457(b) plans.
Under the standard rules, employees age 50 and older can contribute an additional $8,000 in catch-up contributions on top of the regular annual limit in 2026. If you are aged 60 to 63 at the end of the year, that catch-up limit increases to $11,250 for 2026 — equal to 150% of the standard catch-up limit. When you reach age 64, your catch-up contribution reverts to the standard amount.
This enhanced limit is optional for employer-sponsored plans, and not all plans will offer it. If maximizing your retirement contributions in these years is important to your financial plan, it’s worth confirming with your employer whether the super catch-up option is available to you.
Roth catch-up contributions for higher-income employees
SECURE 2.0 also changed where some catch-up contributions must go. Starting Jan. 1, 2026, employees who are age 50 or older and earned more than $150,000 in Social Security wages (Box 3 of Form W-2) from their employer in the prior calendar year must designate all catch-up contributions as Roth contributions. That income threshold is adjusted for inflation annually. For 2026, the threshold looks back to prior-year wages of $150,000.
For many higher earners, this change could have meaningful implications for tax planning, especially if you expect to be in a higher tax bracket in retirement than you are today.
If your plan does not currently offer a Roth contribution option, employees subject to this requirement will not be able to make catch-up contributions at all until the plan is amended. Check with your plan administrator or a Mercer Advisors wealth advisor to understand how this change may affect your savings strategy.
Employer matching on student loan payments
If you’ve been prioritizing student loan payments over retirement savings, SECURE 2.0 includes a provision that may benefit you. Beginning with plan years starting after Dec. 31, 2023, employers are formally permitted to make matching contributions to your retirement account based on the qualified student loan payments you make, even if you’re not contributing to your 401(k) at all.
While the IRS had informally permitted a version of this practice in limited circumstances, SECURE 2.0 codified it into law and gave more employers the flexibility to offer this benefit. Whether your employer has adopted this feature will vary. Check with your human resources department to find out if it’s available.
How to put these changes to work
The SECURE 2.0 Act created meaningful new opportunities that can help you build retirement savings, reduce financial stress, and coordinate your short-term and long-term financial goals. But taking full advantage of these provisions requires knowing what’s available to you and how each feature may fit into your overall financial picture.
Mercer Advisors can work with you at every stage of your financial journey to navigate changes like these. If you’d like to discuss how the SECURE 2.0 provisions apply to your situation, contact your Mercer Advisors wealth advisor.
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The SECURE 2.0 Act of 2022 is a federal law that updated the retirement savings rules established by the original SECURE Act of 2019. It introduced a range of changes designed to help more Americans save for retirement, including new requirements for automatic enrollment in new workplace plans, expanded emergency savings options, and enhanced catch-up contribution limits for workers nearing retirement. Whether these changes affect you depends on your employer’s plan, your income, and your age.
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A PLESA is a short-term savings account that employers may optionally add to their 401k or 403b plans. Eligible employees — those earning below the highly compensated employee threshold — can contribute up to $2,500 per year in after-tax (Roth) dollars and withdraw funds for any reason without a penalty. Contributions count toward your overall 401k deferral limit, and the first four withdrawals each year are not subject to fees solely for making the withdrawal.
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Automatic enrollment is designed to make saving easier by removing the barrier of having to sign up yourself. Before opting out, consider whether the default contribution rate works for your budget and whether your employer offers a matching contribution — one you’d lose out on by not participating. You’re not locked in; you can always adjust your contribution rate up or down at any time to fit your financial situation.
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If you’re aged 60 to 63 and your employer’s plan offers the enhanced catch-up limit, contributing up to $11,250 in catch-up savings in 2026 can meaningfully accelerate your retirement savings in the years when it may matter most. Whether it makes sense for you depends on your overall financial plan, cash flow, and tax situation. A Mercer Advisors wealth advisor can help you determine the right contribution strategy.
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Start by checking with your company’s human resources or benefits department to find out whether your plan has adopted these optional SECURE 2.0 features. You can also review your Summary Plan Description (SPD) — your employer is required to provide the SPD, which outlines the features of your retirement plan. If you’d like help interpreting what’s available to you, a Mercer Advisors wealth advisor can review your plan documents with you.
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Mercer Advisors provides comprehensive financial planning that includes retirement savings strategy, tax planning, and investment management. To discuss how SECURE 2.0 provisions apply to your situation, contact us to speak with a wealth advisor who can review your full financial picture and help you make the most of the opportunities available to you.
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Both types of catch-up contributions allow employees age 50 and older to save beyond the standard annual deferral limit. The standard catch-up limit is $8,000 for 2026. The super catch-up — available only to those who turn 60, 61, 62, or 63 during the year — raises that limit to $11,250 for 2026. When you reach age 64, your limit reverts to the standard catch-up amount. The super catch-up is optional for plan sponsors, so availability depends on your employer’s specific plan.
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A PLESA is specifically designed to provide accessible short-term savings without affecting your retirement account. Hardship withdrawals from a 401k are subject to income taxes and, for those under the age of 59½, a 10% early withdrawal penalty — and they permanently reduce your retirement savings. PLESA withdrawals carry no such penalties, and your retirement account remains intact. If your employer offers a PLESA, it’s generally a much less costly way to access funds in an emergency.
1“FAQs: Pension-Linked Emergency Savings Accounts.” U.S. Department of Labor, Employee Benefits Security Administration.
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