New 401(k) Rules and Benefits for 2023 - 401k Maneuver

New 401(k) Rules and Benefits for 2023

Big changes are coming to 401(k) benefits this year and the next few years. If you want to maximize your retirement savings and your retirement lifestyle, it’s critical you are aware of these changes.  

The new 401(k) rules and benefits are a result of the Secure Act 2.0, which was passed into law December 29, 2022.

Keep reading to find out which changes may affect you and your retirement planning. 

Roth Match

401(k) rules and benefits

Effective this year, employers can now match the Roth option in 401(k)s. Prior to this law, employer matches had to be made with pretax dollars, go into your traditional 401(k), and then you’d have to pay taxes on the money when you withdrew it later on. 

Not anymore. 

This is optional for employers, and employers may elect to make pre-tax matches or not provide a company match at all.

[Related Read: 4 Ways to Potentially Maximize Your 401(k) Company Match]

Increased Catch-up Contributions

401(k) rules and benefits

For employees ages 60 to 63 who want to contribute more, they are now able to contribute $10,000 or 150% of the standard catch-up amount for 2024. These amounts will be adjusted annually based on the cost of living starting in 2026. 

Also, under the new law, catch-up contributions to 401(k) plans must be designated Roth contributions if the employee’s compensation from that employer was more than $145,000. 

This provision takes effect in 2024.

401(k) Withdrawals without Penalty

401(k) rules and benefits

Another positive change this bill brings is that participants can access 401(k) funds for emergencies without penalty.
Starting in 2024, employers may offer participants an emergency savings withdrawal of up to $1,000 per year. 

This withdrawal is not subject to an early withdrawal penalty and may be repaid over 3 years. 

Not every employer will offer this, as it’s at the discretion of the employer to offer this option or not. 

[Related Read: 401(k) Hardship Withdrawals – What You Need to Know

After-Tax Emergency Savings Accounts

401(k) rules and benefits

In addition to or instead of the emergency savings 401(k) withdrawal option, employers can now offer non-highly compensated participants an emergency savings account as part of their retirement plan. 

Employees may voluntarily contribute or may be automatically enrolled at up to 3% of their annual pay – capped at $2,500. 

Contributions to this savings account will be after-tax and participants may take a distribution from their emergency savings account at any time. This goes into effect 2024. 

Again, offering this to employees is at the discretion of the employer. 

Matching Student Loan Payment

401(k) rules and benefits

Starting in 2024, employers can match their employee student loan payments to their 401(k) plan, 403(b) plan, or SIMPLE IRA. 

This is a huge benefit for those who can’t afford to save for retirement because they’re trying to make their monthly student loan payments. 

NOTE: An amendment to the SECURE Act 2.0 allows employer matching contributions to be made to qualified student loan repayments rather than (or in addition to) employee elective deferrals.

RMD Changes

401(k) rules and benefits

Required minimum distribution changes will be phased in over the next 10 years.

Phase 1: RMDs will now start at age 73, starting in 2023. If you have already started RMDs, this will not change for you. 

If you turn 72 in 2023, you can take your first RMD by December 31, 2024, or you could delay it to April 1, 2025. If you delay until April, you will need to take two RMDs in 2025. One for 2024, and one for 2025.

Phase 2: Starting in 2033, the RMDs move up to age 75.

Also included in the bill are massive changes to the original 50% penalty for not taking Required Minimum Distributions on time:

  • The hefty 50% penalty for not taking RMDs will drop to 25% in 2023.
  • The penalty drops to 10% if you take the required amount by the end of the second year that it was due. The penalty could be waived completely if you didn’t take the RMD due to an unforeseen event (like illness), but then withdrew it as soon as you could. You would have to ask the IRS for a penalty waiver.

Another big change is that Roth accounts in workplace plans will be exempt from RMDs starting in 2024.

Easily Find Lost 401(k) Accounts

401(k) rules and benefits

Thanks to the Secure Act 2.0, it will be easier to locate old 401(k) plans left behind when you move jobs. 

The Department of Labor is creating a lost and found database to help people find forgotten retirement benefits. This should be up in the next 2 years.  

Now Is the Time to Get Engaged with Your 401(k)

401(k) rules and benefits

If you really want to increase 401(k) savings, one of the best things you can do is to be engaged with your investments. 

For many, a 401(k) is the largest asset come retirement. So why leave your financial future to chance?

When you gain the necessary knowledge, you may go from being a disconnected investor to one who is engaged with your 401(k) savings and the overall health and well-being of your financial future. 

And that means you are in control. 

There are numerous free online resources available to 401(k) investors – all you need to do is dedicate a bit of time and energy to your education. 

401(k) Maneuver is committed to providing you information that will help you become a better 401(k) investor. 

Subscribe to our YouTube channel and get notified every time we post a new video with tips on how to maximize your retirement savings or on important changes that may impact your 401(k).

Subscribe to this blog and get weekly email roundups on the latest 401(k) news and tips on how you can become a better investor.

Prepare Yourself for a Life of Abundance in Retirement. Check Out Our YouTube Channel & Don’t Forget to Subscribe!

Watch Videos

0 0 votes
Article Rating

401(k) Maneuver™ is offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. There are no assurances that a client’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Projections are based on assumptions that may not come to pass.

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

All third-party trademarks, including logos and icons, referenced in this website and our content, are the property of their respective owners. Unless otherwise indicated, the use of third-party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between 401(k) Maneuver and the owners of those trademarks. Any reference inside this website or content to third-party trademarks is to identify the corresponding third-party goods and/or services.

Would love your thoughts, please comment.x

Select a Date from the Calendar below


Select a Date from the Calendar below


Have questions? Need help?

Book Your Complimentary

15-Minute 401(k) Strategy Session


Looking for tips that might maximize your retirement
savings and help you be a better steward of your money?

Subscribe to our 401(k) Blog

The go-to-source for your retirement investing and saving tips

5 401(k) Accounts Mistakes that May Negatively Affect Retirement Income

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

Why Account Balancing & Allocation May Affect 401(k) Performance

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

The 5 Top Costly 401(k) Rollover Pitfalls

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

Make the Best Decision for Retirement:
Understanding the Different Types of
Financial Advisor Licenses

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

How Popular Advice On Target Date Funds May Be
Working To Undermine Your 401(k) Retirement Savings

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

3 Things That May Supercharge Your Future
401K Performance...Even In a Down Economy

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.