sixtyandme logo
We are community supported and may earn a commission when you buy through links on our site. Learn more

Let’s Talk About PLESA

By Beverly Bowers February 05, 2024 Managing Money

Are you one of 63% of workers who cannot cover a $500 emergency expense? Effective January 1, 2024, help may come from your employer in the form of a PLESA which was created by the SECURE 2.0 Act of 2022.

What Is a PLESA?

PLESA stands for pension-linked emergency savings account. Your retirement plan sponsor must choose to add this feature to your benefits. It is not required. If adopted, a PLESA would allow non-highly compensated employees in 401(k), 403(b), and 457(b) retirement plans to make contributions to a separate PLESA account. PLESAs are meant to allow employees to accumulate easy to access funds that can be used in an emergency. These accounts are not meant for retirement savings.


Contributions to PLESAs are made by payroll deduction and must take the form of after-tax contributions. Annual contributions to PLESAs may not exceed $2,500 or the amount designated by your plan sponsor. If a contribution exceeds that amount, you, the employee, may elect to contribute those funds to a different plan account instead. Otherwise, the excess is distributed to you.

If your plan sponsor chooses to offer PLESAs, you may have the option to enroll, or you may be automatically enrolled. Check with your benefits coordinator. Highly compensated employees, those with eligible compensation greater than $150,000 (2023 and indexed for inflation), are not allowed to open a PLESA.


You can draw on your PLESA account as frequently as monthly to pay unpredictable, short-term emergency expenses such an unforeseen car or house repairs. There is no annual limit on withdrawals, nor a minimum balance required for the account. If your employer makes matching retirement plan contributions, they are required to match your PLESA contributions at the same rate. Those matching contributions are not added to the PLESA account, however. They go into a retirement plan account.

Funds in PLESAs must be held at a financial institution in cash, in an interest-bearing savings account, or in a certificate of deposit. The goal is to keep the funds liquid and safe. If you leave the company’s employment or the company terminates the plan, you must be allowed to transfer funds into a designated Roth account in the retirement plan. If none is available, then the funds are eligible for distribution to you. You may not transfer other employer plan funds into a PLESA.

How Widespread Will PLESAs Be?

There are good reasons an employer and plan sponsor may choose not to add a PLESA to their offering. For example, PLESAs will require extra bookkeeping to set up accounts and for recording contributions and withdrawals, as well as to invest funds at financial institutions in cash and cash-like instruments. Nevertheless, if you feel a PLESA would help you save for an emergency, talk with your benefits coordinator about adding it to your company’s offering.

IMPORTANT REMINDER: PLESAs do not take the place of saving for retirement. PLESA funds only cover emergencies.

This blog is part of a series that describes some of the new features or changes to your retirement plans created by the SECURE 2.0 Act of 2022. You might want to check out my other blogs about other SECURE 2.0 Act changes: Retirement Plan Catchups; Military Spouse Tax Credits; Inherited IRAs; and RMD Rules Have Changed.


Let’s Have a Conversation:

Does your company offer a PLESA? If they do or if they did, would it help you save for an emergency? Do you have other ways that you save for emergencies?

Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments

The Author

Beverly Bowers is a retired financial planner who has been solely responsible for her financial life over 25 years. Her passion is to make investments understandable – dispel the mystery and simplify the process. In 2021 she self-published a book, How to Dress a Naked Portfolio, a Tailored Introduction to Investing for Women. She relishes questions from all levels of investors. You may submit questions and sign up for her blogs on her website.

You Might Also Like