What You Need to Know About the New 401(k) Rules

The SECURE 2.0 Act offers some new ways to save for retirement—and access your funds in an emergency. See how this could help you boost your 401(k) savings.


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We all know that 401(k) savings can be a key part of a comfortable retirement, but a lot of people simply aren’t socking that money away. The average balance is $141,542, according to a 2022 Vanguard report, a stat that’s skewed by a lot of high-income, high-savings people. (The median 401(k) balance is just $35,345.)

But the new SECURE 2.0 Act aims to make saving for retirement a whole lot easier—with a little help from your employer. It increases ways for people to save, allows employers to help boost savings in new ways, and makes it easier for people to utilize retirement savings in emergencies—to help get over the hurdle of saving for retirement when you don’t have an emergency fund set up.

Here are some of the benefits you can take advantage of as the act gets rolling over the next few years.

You may have new ways to save for retirement (even if you can’t contribute)

For many young workers who are just starting out, finding money to put aside for their retirement future can take some real finagling. But the SECURE 2.0 Act has some provisions that can help. 

For instance, if student loan repayments have kept you from saving for your retirement, you could still start your retirement fund—without putting a penny into your 401(k).

Starting in 2024, your employer could contribute 401(k) funds for you to match your student loan payments. “That will allow those who are paying off large student loans to be able to participate in their employer’s retirement plan without being left behind for several years while they continue to pay off their student loans,” says Jeb Cogger, CFP and senior director of financial planning research and education at Edelman Financial Engines. “Even waiting just a few years to contribute can make it incredibly difficult to catch up and accumulate the savings and potential investment growth needed to reach secure retirement.”

And if your lack of an emergency fund has been keeping you from saving for retirement, your employer can offer a separate Roth account that would serve as an emergency fund for you. You can contribute up to $2,500 per year (with the possibility of an employer match) and your first four withdrawals each year would be penalty-free.

Part-timers will have easier access to retirement savings.

The SECURE 2.0 Act shortens the amount of time part-time employees need to put in before they can start saving in their 401(k), to two years with at least 500 hours of service. (Currently, part-timers put in three years before they can start saving.)

If you're over 50, you can catch up on your 401(k) contributions

People over 50 can currently contribute an additional $6,500 above the current $20,500 401(k) limit. And people over 60 will be able to sock away even more. “Starting in 2025, when someone reaches that age, they will be able to contribute even more money via their catch-up contribution, equal to the great amount of $10,000 or 150 percent of the regular catch-up contribution,” Cogger says. “This allows for late savers to catch up more aggressively than in the past.”

(Keep in mind that if you earn more than $145,000, your catch-up contributions will be put into a Roth 401(k) instead—which means you won’t see any tax savings up front, but won’t pay any taxes on the earnings when you withdraw it.)

There are new ways to access your retirement savings in a pinch

Even if your employer doesn't offer a designated emergency fund Roth as an option, there are other ways that the Secure 2.0 Act has made it easier to access funds when you need them—without paying the penalties and taxes normally associated with a 401(k) loan.

Under the new law, your employer can allow you to withdraw $1,000 in “rainy day” funds to help you cover unexpected expenses.

People in certain circumstances are given other opportunities to make withdrawals up to $22,000, penalty-free. “The SECURE Act has additional early withdrawal options to avoid penalties for private-sector firefighters, correction officers, individuals with terminal illness, victims of domestic abuse, people in disaster areas, and public safety workers,” Cogger says.

But Cogger recommends making sure it’s a true emergency before you dip into your retirement. “Taking money out of a retirement account is a ‘break glass in case of an emergency’ situation and should be used sparingly. Taking distributions early can hinder your ability to accumulate what you need for retirement in the future.”

Your company may automatically enroll you in a 401(k)

Starting in 2024, the SECURE 2.0 Act requires that new workplace savings plans automatically enroll their employees, at a starting amount of at least 3 percent (and up to 10 percent). Employees would have to officially opt out if they don’t want to save for retirement.

If you're retired, you can wait longer to take a distribution

You used to have to start withdrawing from your 401(k) at 70 ½ years old, but you can now wait until you turn 73 to start touching your retirement funds—and in 10 years, that age will jump to 75. (And if you have a Roth IRA, there are no required distributions.)

You'll get help finding (and consolidating) your old 401(k)s

If you've changed jobs a lot, you probably know that transferring a 401(k) into your new employer's plan (or a separate IRA) can be a less-than-simple process—and that's probably why so many workers opt to just take the payout from a small 401(k) instead of going through the hassle.

But the SECURE 2.0 Act creates a new "lost and found" database you can use to find any retirement accounts you may have left—and requires that providers make it easier to move and consolidate them.

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