The Internal Revenue Service (IRS) has released initial guidance to assist employers in implementing pension-linked emergency savings accounts (PLESAs). This development follows the authorization of PLESAs under the SECURE 2.0 Act of 2022, aimed at encouraging employees to save for financial emergencies.

Key Features of PLESAs

• Eligibility and Contributions: Employees eligible to participate in an employer’s defined contribution plan can contribute to a PLESA, even if they do not participate in the main plan. Employers may start offering PLESAs in plan years beginning after December 31, 2023.
• Contribution Match: Employers can match PLESA contributions at the same rate as those made to the linked defined contribution plan, subject to certain restrictions.
• Maximum Balance: The maximum balance in a PLESA is generally capped at $2,500, although employers have the discretion to set a lower limit

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