SECURE 2.0 Act in 2026: New Rules That Affect Your Retirement

Mark your calendar for 2026. That's when several significant provisions of the SECURE 2.0 Act, signed into law in December 2022, finally take effect. While some changes happened immediately and others rolled out in 2024 and 2025, the 2026 provisions could fundamentally change how you save for retirement, especially if you're juggling student loans, managing 529 education accounts, or trying to build an emergency fund while saving for your future.

The SECURE 2.0 Act represents the most comprehensive retirement legislation in decades, containing over 90 provisions designed to help Americans save more effectively. Unlike the original SECURE Act of 2019, which focused primarily on Required Minimum Distributions (RMDs) and expanding access to retirement plans, SECURE 2.0 addresses real-world challenges that many Americans face, from student debt to emergency expenses that derail long-term savings.

Important Disclaimer: The information in this article is for educational purposes only and should not be considered financial advice. We are not certified financial planners. Always consult with a qualified financial advisor or tax professional before making decisions about your retirement accounts, investments, or tax strategies.

Starting in 2026, one of the most anticipated provisions of SECURE 2.0 becomes available: the ability to roll unused 529 plan funds into a Roth IRA. If you've been hesitant to fully fund a 529 plan because you worried about what happens if your child doesn't go to college, gets a scholarship, or the account simply has leftover funds, this change is for you.

Here's how the 529-to-Roth rollover works:

The basic requirements:

• The 529 account must have been open for at least 15 years before you can roll funds to a Roth IRA
• The Roth IRA must be in the name of the 529 beneficiary (not the account owner)
• You can roll over up to $35,000 over the beneficiary's lifetime
• Annual rollover amounts are subject to the standard Roth IRA contribution limits ($7,000 in 2024, $8,000 if 50 or older)
• The beneficiary must have earned income equal to or greater than the rollover amount
• Contributions and earnings from the last five years are not eligible for rollover

This provision solves a long-standing problem with 529 plans. Previously, if you didn't use the funds for qualified education expenses, you'd face a 10% penalty plus income taxes on the earnings portion of withdrawals. You could change beneficiaries to another family member, but many people ended up leaving money on the table or forcing unnecessary education expenses just to avoid penalties.

Practical example: Let's say you opened a 529 plan for your daughter in 2011 and contributed diligently. She graduates in 2025 with $25,000 remaining in the account after receiving scholarships. Starting in 2026, you could begin rolling that money into a Roth IRA in her name, giving her a significant head start on retirement savings. Over several years, following annual contribution limits, the entire $25,000 could be transferred penalty-free and tax-free, as long as she has sufficient earned income each year.

Financial advisors have long faced a dilemma: should someone prioritize building an emergency fund or contributing to their 401(k)? The answer has always been both, but that's challenging when you're working with limited resources. SECURE 2.0 addresses this by allowing employers to offer pension-linked emergency savings accounts (PLESAs) starting in 2026.

These employer-sponsored emergency savings accounts work differently from your traditional emergency fund:

• Available to non-highly compensated employees (those earning $155,000 or less in 2024)
• Linked directly to your employer's retirement plan
• Funded with after-tax dollars through payroll deduction
• Capped at $2,500 (or lower if your employer chooses)
• At least one withdrawal per month must be allowed, penalty-free
• Funds can be automatically invested in a stable value fund or similar low-risk option
• First four withdrawals per year must be free from fees

The beauty of this provision is behavioral. Research consistently shows that people are more likely to save when it's automatic and convenient. By integrating emergency savings into the retirement plan infrastructure, employers can help workers build both short-term security and long-term wealth simultaneously.

For employers, offering PLESAs can improve overall retirement plan participation. When employees know they have accessible emergency funds, they're often more comfortable contributing to their 401(k) or 403(b), since they're not worried about locking all their money away until retirement.

What to do in 2025: If you're an employer or HR professional, start discussing with your retirement plan provider whether they'll support PLESAs and how implementation would work. If you're an employee, consider asking your benefits team if they plan to offer this option. Having this conversation now gives your company time to prepare for a 2026 launch.

This provision technically began in 2024, but many employers are still implementing it in 2025 and 2026. It deserves attention because it directly addresses one of the biggest retirement savings obstacles for younger workers: student loan debt.

Under SECURE 2.0, employers can now make matching contributions to your 401(k) or 403(b) based on your qualified student loan payments, even if you're not contributing your own money to the retirement account. This is revolutionary for anyone who's had to choose between paying off student debt and saving for retirement.

How student loan matching works:

• You make qualified student loan payments on your own education debt
• You provide documentation to your employer (similar to how FSA reimbursements work)
• Your employer makes matching contributions to your retirement account based on those payments, following the same matching formula they use for regular 401(k) contributions
• The match goes into your retirement account, even though you didn't contribute cash yourself

For example, if your employer offers a 50% match on the first 6% of salary you contribute, and you earn $60,000 per year, they'd normally match up to $1,800 if you contributed $3,600. With student loan matching, if you pay $3,600 toward your student loans during the year, your employer could put that same $1,800 match into your 401(k), even if you contributed nothing yourself.

The impact is significant. According to Federal Reserve data, Americans held over $1.7 trillion in student loan debt as of 2024. Millions of borrowers have delayed retirement savings because of these obligations. Student loan matching allows them to make progress on both goals simultaneously.

Important note: Not all employers will offer this benefit. It's optional, and implementation varies by company. Check with your HR department to see if your employer plans to offer student loan matching. If they don't currently offer it, consider making the case, especially if your company struggles to attract younger talent.

While 529 rollovers, emergency savings accounts, and student loan matching represent the headline provisions for 2026, several other SECURE 2.0 changes deserve your attention:

Automatic enrollment expansion: Starting in 2025, new 401(k) and 403(b) plans must automatically enroll eligible employees at a contribution rate between 3% and 10%, with automatic annual increases of 1% up to at least 10% (but not more than 15%). Employees can always opt out, but automatic enrollment has proven to dramatically increase participation rates.

Increased catch-up contributions: Beginning in 2025, participants aged 60 to 63 can make enhanced catch-up contributions. For 2025, this amount is the greater of $10,000 or 150% of the regular catch-up contribution amount. This acknowledges that many people in their early 60s are in their peak earning years and want to maximize savings before retirement.

Roth employer matching: Starting in 2026, employees can choose to receive employer matching contributions as Roth (after-tax) rather than traditional (pre-tax). This provides more flexibility in managing your tax situation in retirement. The catch is that Roth matches are taxable in the year received, so you'll owe taxes on that match even though it goes into your retirement account.

RMD age continues to increase: While the RMD age increased to 73 in 2023 (from 72), it will increase again to 75 in 2033. The penalty for missing an RMD has also been reduced from 50% to 25% of the amount that should have been withdrawn (and potentially to 10% if corrected quickly). These changes give retirees more flexibility in managing their tax liability.

Special note on RMDs and Roth accounts: Starting in 2024, Roth accounts in employer plans (Roth 401(k), Roth 403(b)) are no longer subject to RMDs during the owner's lifetime. Previously, unlike Roth IRAs, Roth employer accounts required distributions starting at the RMD age. This change makes Roth employer accounts more attractive for those who want to leave tax-free assets to heirs.

With 2026 approaching, here are concrete steps to take advantage of these retirement law changes:

1. Review your 529 plans: If you have a 529 account that's been open for close to 15 years (or will reach that milestone soon), start planning for potential Roth IRA rollovers. Calculate how much might be left after education expenses, and ensure the beneficiary understands this could become retirement savings. Remember, they'll need earned income to accept the rollover.

2. Talk to your employer: Ask your benefits or HR team about plans for emergency savings accounts and student loan matching. Express interest in these benefits. Employer adoption isn't mandatory for most provisions, so employee interest can influence implementation decisions.

3. Reconsider your Roth strategy: With employer matches potentially available as Roth contributions in 2026, and no more RMDs on Roth employer accounts, the case for Roth contributions has strengthened for many workers. Consult with a tax professional about whether traditional or Roth contributions (or a mix) make sense for your situation.

4. Maximize catch-up contributions: If you're 60 to 63 in 2025 or later, take advantage of the enhanced catch-up contribution limits. This is your window to supercharge retirement savings during peak earning years.

5. Document student loan payments: If you're making student loan payments and your employer offers (or might offer) student loan matching, keep meticulous records of your payments. You'll need documentation to claim this benefit.

6. Review your RMD timeline: If you're approaching retirement, understanding the current RMD age of 73 (and future increase to 75) helps with tax planning. Consider whether Roth conversions make sense before RMDs begin, especially with the Roth employer account RMD exemption.

The SECURE 2.0 Act represents the most significant retirement policy shift in years, with provisions rolling out through 2026 and beyond. These aren't just technical changes; they're responses to real challenges that Americans face every day. Whether you're dealing with student loans, worried about emergency expenses derailing your retirement savings, or concerned about overfunding a 529 plan, SECURE 2.0 provides new tools to address these concerns.