Companies can now better assist employees with some of their most immediate financial needs.
Part of the Secure 2.0 Act, a law aimed at helping more people prepare for retirement that went into effect at the start of this year, includes a new way for companies to help employees amass emergency savings.
Under the new law, employers can set up “not highly compensated employees” (in 2024, that includes those making less than $155,000) with emergency savings accounts as part of their retirement benefits, according to the Department of Labor. Unlike retirement accounts, however, participants can withdraw funds from these emergency savings accounts — pension-linked emergency savings accounts — without penalties. Employees can also now withdraw a small amount of funds (up to $1,000 per year) from their retirement accounts to cover emergency costs and not incur any penalties in doing so.
