IR-2024-11: IRS provides initial guidance to employers setting up emergency savings accounts for their employees

IRS Newswire

January 12, 2024

Issue Number:? ??IR-2024-11

Inside This Issue

IRS provides initial guidance to employers setting up emergency savings accounts for their employees

WASHINGTON ? The Internal Revenue Service today issued initial guidance to help employers with implementation of pension-linked emergency savings accounts (PLESAs).

Authorized under the SECURE 2.0 Act of 2022, PLESAs are individual accounts in defined contribution plans and are designed to permit and encourage employees to save for financial emergencies.

Employers can offer PLESAs in plan years beginning after Dec. 31, 2023. This means that, in some cases, eligible employees could have begun contributing to a PLESA as early as Jan. 1, 2024. Subject to certain restrictions, matching contributions are made with respect to PLESA contributions at the same rate as contributions to the linked defined contribution plan.

Employees who are eligible to participate in an employer?s defined contribution plan and qualify to contribute to a PLESA, if their employer offers one, may contribute to the PLESA even if they don?t participate in the employer?s defined contribution plan. In general, the maximum balance in a participant?s PLESA (attributable to contributions) is $2,500, though employers can choose to set a lower limit.

PLESAs are treated as designated Roth accounts. This means that contributions are not tax deductible, but withdrawals are generally tax free. Participants can withdraw funds held in the PLESA at least once a month, as necessary.

Guidance on reasonable measures employers who offer PLESAs can take to discourage potential manipulation of the PLESA matching contribution rules can be found in Notice 2024-22, posted today on IRS.gov. The notice also requests public comment and explains how to submit comments.

?? ?? ?

Thank you for subscribing to the IRS Newswire, an IRS e-mail service.

If you know someone who might want to subscribe to this mailing list, please forward this message to them so they can subscribe.

This message was distributed automatically from the mailing list IRS Newswire. Please Do Not Reply To This Message.

Update your subscriptions, modify your password or email address, or stop subscriptions at any time on your Subscriber Preferences Page. You will need to use your email address to log in. If you have questions or problems with the subscription service, please contact subscriberhelp.govdelivery.com.

This service is provided to you at no charge by the Internal Revenue Service (IRS).

This email was sent to [email protected] by: Internal Revenue Service (IRS) ? Internal Revenue Service ? 1111 Constitution Ave. N.W. ? Washington DC 20535

News Essentials

The Newsroom Topics

IRS Resources

Issue Number:? ??IR-2024-11

Inside This Issue