Employees can now withdraw up to $1,000 from their 401(k)s without penalties if the money is needed for an emergency expense. The Department of the Treasury and the Internal Revenue Service has issued final regulations updating the required minimum distribution (RMD) rules, reflecting changes made by SECURE 2.0 that impacts retirement plan participants, IRA owners and their beneficiaries.

The reasons for an emergency expense include medical care, funeral expenses, auto repairs, foreclosure and "any other necessary emergency personal expenses," according to the IRS. "For purposes of determining whether an individual has an unforeseeable or immediate financial need, the administrator may rely on an employee's written certification that the employee is eligible for an emergency personal expense distribution," according to the IRS.

This new emergency withdrawal program, which is optional for employer plans, is meant for low- and moderate-income workers, since it is faster and cheaper than other ways to tap into retirement savings.