US Department of Labor issues guidance on new emergency savings accounts

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Summary:

The U.S. Department of Labor has issued guidance to improve retirement security through pension-linked emergency savings accounts (PLESAs), as part of the implementation of the SECURE 2.0 Act of 2022. PLESAs are short-term savings accounts within retirement savings plans (e.g., 401(k)) that allow employees to withdraw funds without penalty in case of emergency expenses. Employers can automatically enroll employees, make contributions through payroll deductions, and provide matching employer contributions to the linked retirement plans. The guidance includes 20 FAQs and responses, developed with stakeholder input, and the IRS has also provided initial guidance on anti-abuse rules.