SECURE 2.0 changes several 401k rollover rules that directly affect costs and timelines in 2026. Key updates include higher catch-up contribution limits, revised RMD ages, new automatic portability provisions, and updated withholding rules. Understanding these changes helps you avoid unnecessary taxes and penalties when moving retirement funds. (Related: The Complete Guide to In-Service 401k Rollovers: Rules and Eligibility 2026) (Related: Texas 401k Rollover Tax 2026: The Complete Guide to What You Pay) (Related: Complete Guide to Rolling Over Multiple 401k Accounts in 2026) (Related: How Proposed Roth IRA Rollover Legislation Affects Your Retirement Strategy – Analysis and Calculator Guide) (Related: How to Rollover Your 401k to an IRA: Complete Guide & Steps) (Related: Complete 401k Rollover Guide: How to Roll Over Your 401k Safely and Maximize Your Retirement)

How SECURE 2.0 Changes Rollover Costs and Withholding Rules

One of the most practical changes under SECURE 2.0 involves how mandatory withholding applies during certain rollovers. The law made targeted adjustments to withholding requirements and notice deadlines that can directly impact how much money you actually receive — and how much you must replace out of pocket to complete a tax-free rollover.

Mandatory 20% Withholding Still Applies to Indirect Rollovers

Under existing rules that SECURE 2.0 did not eliminate, when you take an indirect rollover — meaning the plan administrator writes the check to you rather than directly to your new custodian — your employer is required to withhold 20% of the taxable amount for federal income taxes. This rule remains fully in effect in 2026.

If you receive a $100,000 distribution, you only get $80,000 in hand. To complete a full, tax-free rollover within the 60-day window, you must deposit the full $100,000 into the new account. That means finding $20,000 from your own funds to cover the withheld portion. The withheld amount is eventually refunded when you file your taxes, but the out-of-pocket burden in the interim is real. The best way to avoid this cost entirely is to use a direct (trustee-to-trustee) rollover.

Updated Safe Harbor Notice Deadlines

SECURE 2.0 adjusted certain safe harbor notice requirements that plan administrators must provide before distributions. For rollovers, this means plan sponsors have updated windows for delivering the required rollover notice (the “402(f) notice”). While this primarily affects plan administrators, employees benefit from receiving clearer cost and tax disclosures before initiating a rollover.

New RMD Age Rules and Their Rollover Implications in 2026

SECURE 2.0 pushed the Required Minimum Distribution (RMD) starting age to 73, with a scheduled increase to age 75 in 2033. In 2026, the applicable age is 73. This change has direct cost implications for rollovers because you cannot roll over an RMD — it must be distributed and is fully taxable in the year taken.

Why This Matters for Rollover Amounts

If you are 73 or older and initiating a 401k rollover in 2026, you must first calculate and distribute your RMD for the year before rolling over the remaining balance. Rolling over an RMD is considered an excess contribution to the receiving IRA, which triggers a 6% excise tax per year until corrected. This is a costly and easily avoidable error.

Use our RMD Calculator to determine exactly how much must be distributed before you roll over the rest of your account balance. Getting this number wrong directly increases your tax liability.

First-Year RMD Delay Option

SECURE 2.0 preserved the option to delay your first RMD until April 1 of the year following the year you turn 73. However, doing so means taking two RMDs in that second year, which increases taxable income and may push you into a higher bracket — raising the effective cost of your rollover strategy. Always factor in this timing when planning your rollover date.

SECURE 2.0 Automatic Portability and What It Costs

One of SECURE 2.0’s most significant process-level changes is the formal authorization and expanded use of automatic portability programs. These programs are designed to automatically move small 401k balances (typically under $7,000) when a worker changes jobs, reducing the number of abandoned accounts.

Fee Structure Under Automatic Portability

Automatic portability providers charge fees for facilitating these transfers. Under the SECURE 2.0 framework, these fees are permitted to be charged against the participant’s account, but they must be reasonable and disclosed. Typical fees range from $30 to $100 per transfer, depending on the provider and account size. For a $1,000 balance, a $75 fee represents 7.5% of the total — a significant percentage cost.

If your balance qualifies for automatic portability but you prefer to control the process yourself, you can opt out and execute a direct rollover manually at no transaction cost from most major custodians. Always confirm your destination custodian’s incoming rollover fee before initiating the transfer.

The $7,000 Forced Rollover Threshold

SECURE 2.0 raised the threshold for mandatory plan distributions (sometimes called “involuntary cashouts”) from $5,000 to $7,000. If your vested balance is $7,000 or less when you leave an employer, the plan is now permitted to automatically roll your balance to an IRA selected by the plan. This protects you from an automatic taxable cash distribution, but the selected IRA may carry fees higher than alternatives you would choose yourself.

Updated Catch-Up Contribution Limits and Rollover Basis Tracking

SECURE 2.0 introduced enhanced catch-up contribution limits for participants aged 60–63 starting in 2025, carrying forward into 2026. The enhanced limit is the greater of $10,000 or 150% of the regular catch-up limit, indexed for inflation. In 2026, this means workers in that age band can contribute substantially more to their 401k — which directly increases the account balance subject to rollover and the tax complexity involved.

Roth Catch-Up Requirement for High Earners

For employees earning over $145,000 (indexed), SECURE 2.0 requires that catch-up contributions be made on a Roth (after-tax) basis starting in 2026. This creates a split account structure — pre-tax dollars in the traditional 401k and after-tax dollars in the Roth portion — that must be tracked separately during a rollover. Pre-tax funds roll to a Traditional IRA; Roth funds roll to a Roth IRA. Mixing them triggers a taxable event.

Use our Traditional vs Roth IRA Calculator to compare the long-term cost difference between receiving pre-tax versus after-tax rollover funds.

Use Our Free Calculators to Estimate Your Rollover Costs

The SECURE 2.0 changes affect different aspects of your rollover depending on your age, account balance, and income. These free tools help you quantify the cost impact before you make any moves:

401k Rollover Calculator — Estimate the net value of your rollover after taxes and fees based on your specific balance and rollover method.
RMD Calculator — If you are 73 or older, calculate the required minimum distribution that must come out before you roll over the remaining balance.
Early Withdrawal Penalty Calculator — Determine the full tax and penalty cost if you take a distribution instead of completing a proper rollover.

Frequently Asked Questions

Does SECURE 2.0 change the 60-day rollover rule in 2026?

No. The 60-day window for completing an indirect rollover remains unchanged. You must deposit the full distribution amount — including any withheld taxes — into the new account within 60 days to avoid taxation. SECURE 2.0 did not extend or eliminate this deadline.

What is the rollover fee for automatic portability transfers under SECURE 2.0?

Fees vary by provider but typically range from $30 to $100 per transfer. These fees are charged directly to your account balance and must be disclosed in advance. You can opt out of automatic portability and execute a free direct rollover yourself at most major custodians.

Can I roll over Roth 401k catch-up contributions to a Traditional IRA?

No. Roth 401k funds, including the mandatory Roth catch-up contributions required for high earners under SECURE 2.0, must be rolled into a Roth IRA. Rolling them into a Traditional IRA would be a prohibited transaction and create a taxable event.

How does the new $7,000 forced rollover threshold affect my costs?

If your balance is $7,000 or less, your former employer’s plan may automatically roll your funds to a designated IRA. That IRA may carry higher expense ratios or maintenance fees than accounts you would independently select. Review the fee schedule of any auto-rollover IRA and transfer the funds if lower-cost options are available.

Does the SECURE 2.0 RMD age change affect state income taxes on rollovers?

Indirectly, yes. Delaying RMDs to age 73 means more of your account balance remains available for rollover tax-free. However, when RMDs do begin, they are taxable at the federal level and in most states. State tax treatment of retirement income varies — some states exempt all retirement income, others tax it fully. Check your state’s rules before projecting your total rollover cost.

How the Death of the Fiduciary Rule Affects Your 401(k) Rollover Decisions

SECURE 2.0 Complete Guide to 401k Rollover Rules in 2026