IRS Guidance on SECURE Act 2.0’s New PLESA Savings Accounts

by Prof. Robert Bloink and Prof. William H. Byrnes

Starting in 2024, employers are permitted to offer a new type of employment benefit designed to encourage employees to save for emergencies. The SECURE Act 2.0 allows employers to offer emergency savings plans that are formally linked to an employer-sponsored retirement plan. These pension-linked emergency savings accounts, or PLESAs, provide a tax-advantaged emergency savings option. Because this savings account is entirely optional and the law itself provided only bare-bones guidance, the accounts have yet to gain traction with most employers. The IRS and DOL have now released initial guidance designed to offer clarity to employers who wish to offer this new type of employment benefit—and to help employers prevent employees from manipulating the PLESA option solely to receive an employer matching contribution.

PLESAs: Background