DOL Releases Pension-Linked Emergency Savings Accounts (PLESAs) Compliance FAQs

The U.S. Department of Labor (DOL) Employee Benefits Security Administration (EBSA) has issued guidance on pension-linked emergency savings accounts (PLESAs) as part of the implementation of the SECURE 2.0 Act of 2022. FAQs have been prepared by DOL in consultation with the Department of the Treasury and Internal Revenue Service (IRS) providing general compliance information under ERISA regarding PLESAs.

PLESAs are short-term savings accounts established and maintained within a defined contribution plan. Under section 801(b) of ERISA, a PLESA allows employees who are not highly compensated employees to make Roth contributions to a PLESA. Employees who contribute to a PLESA may draw from the PLESA as frequently as monthly without reducing their retirement savings in their accounts within the linked defined contribution plans and without incurring the tax penalties ordinarily associated with early withdrawals from a retirement account. All of ERISA’s protections apply to the PLESA regardless of whether the employee participates in the retirement savings portion of the plan.

Twenty Q&As cover eligibility, participation, automatic enrollment, contributions, distributions/withdrawals, investment options designated for PLESAs, fees, reporting and disclosure.