Pension-linked emergency savings account (PLESA)

What a PLESA is

The SECURE 2.0 Act allows plans to add PLESAs for plan years beginning after December 31, 2023. Employees contribute on a Roth basis, and the plan may enroll them automatically at up to 3% of pay. The money is held in a cash-like investment designed to preserve principal. Participants can withdraw at their own discretion at least once a month, with no need to show an emergency, and the first four withdrawals in a plan year cannot carry a fee.

For 2027 the cap rises to $2,700. (IRS Notice 2026-66)

Why it matters to employers

If your plan matches deferrals, it must match PLESA contributions at the same rate, and the match goes into the regular retirement account, not the PLESA. PLESA contributions count toward the annual deferral limit. The feature adds recordkeeping, and the IRS has issued anti-abuse guidance for employers concerned about employees contributing only to collect the match.

Example with 2026 figures

An employee contributes $100 a month to her PLESA. After 26 months her contributions reach the $2,600 cap. From then on, further contributions go to her Roth 401(k) account, or stop if she has no Roth deferral election.

Common mistakes

• Letting highly compensated employees contribute. Someone who becomes highly compensated keeps the balance but cannot add to it.

• Leaving PLESA contributions out of the match calculation.

• Asking participants to justify a withdrawal.