DOL Releases FAQ on Secure 2.0 Emergency Savings Accounts

PLESAs, as the IRS explained, “are individual accounts in defined contribution plans and are designed to permit and encourage employees to save for financial emergencies.”

Gomez said that the ”plans can offer these accounts to workers as an additional option that provides them access to needed funds when emergency situations arise,” such as emergency dental care, a broken refrigerator or automotive repairs, which can “force workers to tap into their retirement savings plans through loans and hardship withdrawals.”

Labor’s FAQ answers 20 questions on topics from eligibility and participation to contribution, distribution and withdrawal rules.

As Labor explains, “employers may automatically enroll their employees into PLESAs, make employee contributions to the PLESAs through payroll deductions and make matching employer contributions to the linked retirement plans.”

Participating employees “can easily withdraw funds saved in their PLESA without the penalties of drawing from retirement savings. Employers may set a limit of up to $2,500 for contributions,” Labor said.

The PLESA feature is available for plan years beginning after Dec. 31, 2023.