With the new year will come new rules regarding retirement savings.

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

Here’s how they’ll affect your retirement savings and inheritance.

Older workers can contribute even more to their retirement plans

Some older workers may be eligible for higher earnings catch-up contributions to their professional retirement plans such as 401(k)s and 403(b) thanks to the new Secure 2.0 provisions,

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

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

“If you have the ability to save additional money, we definitely suggest you do so,” Griffin said. “If you already have a lot of money in your retirement account, the additional catch-up contribution may not be of much benefit to you.”

Employers must automatically enroll their workers in retirement plans

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

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

“We certainly have a savings problem in the United States, where younger employees don’t want to contribute to retirement accounts,” Griffin said. “You (could) start saving at 3% and look at this (account) in five years and say ‘Wow, this benefits me.’

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

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

In the past, people who inherited IRAs from their parents or grandparents could let investments in that account grow over time, deferring taxes and taking distributions when they wanted. The Secure Act eliminated these “expand IRAs“, requiring people to make distributions over a 10-year period.

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

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 made.

Starting 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, chief executive of financial planning at Charles Schwab.

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