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requirements are satisfied as needed.
Imperatively, as explained in the notice, PLESAs are intended to allow low- and
taxpayers must keep records sufficient to
establish that these labor requirements middle-income employees to accumulate by
have been met. payroll deduction easy-to-access funds that
It is expected that Treasury will issue
further guidance implementing these they can use in an emergency.
provisions. The notice alerts the public
that Treasury and the IRS anticipate
issuing proposed regulations with re- of the SECURE 2.0 Act, and are effec- the general terms of the plan (ERISA
spect to the labor requirements, a sign tive for plan years beginning after 2023. §801(b)(2)).
that more clarity is to come. As of this PLESAs are intended to allow A contribution cannot be credited to
writing, uncertainties remained around low- and middle-income employees to the PLESA account if it would cause
reporting requirements (e.g., new forms), accumulate by payroll deduction easy- the balance attributable to employee
penalty provisions, the timeline for ap- to-access funds that they can use in an contributions to exceed the lesser of
proval of proposed wage determinations, emergency. Only non–highly compensated $2,500 (as indexed for inflation after
and more. employees as defined in Sec. 414(q) may 2024) or other amount designated by the
From Eugene Boakye, J.D., LL.M. contribute to a PLESA (Sec. 402A(e)(2)). plan sponsor under Sec. 402A(e)(3). If
(Eugene.Boakye@rsmus.com); Brent Highly compensated employees include any contributions cause a PLESA bal-
Sabot, CPA, MST (Brent.Sabot@ employees with eligible compensation for ance to exceed the maximum allowed
rsmus.com); and Deborah Gordon, J.D., the lookback year of more than $150,000 amount, the participant may elect or
LL.M. (Deborah.Gordon@rsmus.com), in 2023 (indexed for inflation). Such will be deemed to have increased the
Washington, D.C. contributions must take the form of contribution rate to another account in
designated after-tax Roth contributions the plan so that the excess is credited
under Sec. 402A(e)(1)(A). to that account (Sec. 402A(e)(3)(B)).
Employee Benefits If an employee later becomes a highly Otherwise, the excess amount will be
& Pensions compensated employee, the employee distributed to the participant.

may not make further contributions Under Sec. 402A(e)(4)(A), a plan
The new participant-linked to the account but retains the right to may either offer to enroll participants in
emergency savings accounts withdraw any account balance under a PLESA or automatically enroll them.
under SECURE 2.0

The SECURE 2.0 Act of 2022, enacted
Dec. 29, 2022, as Division T of the Con-
solidated Appropriations Act, 2023, P.L.
117-328, creates a new “pension-linked
emergency savings account” (PLESA).
If adopted by a plan sponsor, a PLESA
would allow non–highly compensated
employees in Sec. 401(k), 403(b), or gov-
ernmental 457(b) plans to make after-
tax Roth contributions to a separate
PLESA account and to draw on that
IMAGE BY IVAN-BALVAN/GETTY IMAGES expenses, such as an auto repair.
account as frequently as monthly to pay
unpredictable, short-term emergency

The PLESA rules are found in
Sections 801–804 of the Employee Re-
tirement Income Security Act of 1974
(ERISA), with corresponding provisions
in Sec. 402A(e) of the Internal Revenue
Code, both as amended by Section 127

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