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ARTICLE · 07 MARCH 2024

The DOL Issues New Guidance On PLESA

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The SECURE 2.0 Act of 2022 had many retirement plan provisions, including the pension-linked emergency savings account (PLESA)...

United StatesEmployment and HR
Craig A. Day
Craig A. Day

The SECURE 2.0 Act of 2022 had many retirement plan provisions, including the pension-linked emergency savings account (PLESA) that lets workers contribute money to an account in a defined contribution plan that can be used to cover unforeseen financial hardships. In consultation with the Treasury Department and the IRS, the DOL recently issued guidance regarding PLESAs in the form of FAQs. There are no earth-shattering revelations in the FAQs, but there are a few nuggets to glean from them.

PLESAs allow eligible participants to contribute up to $2,500 (as Roth contributions) to an emergency savings account linked to a defined contribution plan (including a 401(k) plan). Participants can withdraw the funds monthly with no penalty and no requirement to provide documentation of an emergency. The idea is that Americans can build an emergency fund they can easily access while also taking advantage of any employer matching contribution. Because PLESA funds must be

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