With the new year comes new retirement savings rules.

On January 1, some new provisions of Secure 2.0, a federal retirement law, will go into effect. These new rules could help you save more for retirement or force you to start withdrawing funds.

Here’s how it will affect your retirement savings and inheritance.

Older workers can contribute even more to their retirement plans

Some older workers may be eligible to make larger recovery contributions to their workplace retirement plans, such as 401(k)s and 403(b), thanks to the new Secure 2.0 provisions,

Workers who are aged 60, 61, 62 or 63 will be able to make catch-up contributions of up to $11,250 in 2025, compared to $7,500 for all other workers age 50 and older.

Michael Griffin, a CFP at Henssler Financial, recommends that older workers who still want to save and have extra income to invest take advantage of the new rule.

“If you have the ability to save extra money, we definitely suggest you do that,” Griffin said. “If you already have a lot of money in your retirement account, maybe the additional catch-up contribution isn’t that beneficial to you.”

Employers must automatically enroll workers in retirement plans

The new rules will also require 401(k) and 403(b) plans. is automatically registered workers unless they choose to opt out.

Workers must be enrolled at initial rates of 3% to 10%. After that, the savings rate increases by one percentage point each year until it reaches at least 10%, although it is capped at 15%.

“We definitely have a savings problem in the U.S. where younger workers don’t want to contribute to retirement accounts,” Griffin said. “You might start saving at 3% and look at that (account) five years down the road. and say “Wow, that gives me an edge.”

While the policy is intended to encourage people to save for retirement, some Vanguard research indicates that automatic enrollment and increases may not benefit workers who frequently change jobs and don’t stay long enough to experience the benefits of the increased savings rate.

Did he inherit an IRA? You will need to take the minimum required distributions

In the past, people who inherited IRAs from their parents or grandparents could let the investments in that account grow over time, tax-deferring and taking distributions when they chose. The Secured Act eliminated these “stretch IRAs”, asking people to take distributions over a period of 10 years.

“If someone is receiving money from a parent, or really anyone other than their spouse, then these new rules come into play,” said Brett Koeppel, CFP and founder of Eudaimonia Wealth. However, spouses who inherit the IRA can take advantage of the “stretch IRA.”

The rule only applies to those who inherited IRAs from people who died in 2020 or later. The IRS recently provided clarification on how these distributions will be taken out.

Beginning in 2025, non-spouse beneficiaries of inherited IRAs must take distributions from their account each year until the end of the 10-year period, when the account must be completely emptied, explained Rob Williams, managing director of financial planning at Charles Schwab.

And if someone fails to take a distribution from their inherited IRA by the deadline, they could be on the hook for a penalty of up to 25% of the undistributed amount.