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Federal Agencies Issue PLESA Guidance

January 24, 2024

The IRS and the U.S. Department of Labor recently issued guidance which addresses the newly created Pension Linked Emergency Savings Accounts (“PLESAs”), a novel plan design option authorized under SECURE 2.0. PLESAs are essentially “side car” savings accounts that can be added to defined contribution plans. PLESAs are subject to significantly relaxed distribution restrictions and are intended to facilitate plan participation and retirement savings among lower income workers. PLESAs became available for plan years beginning after December 31, 2023. A recent study shows that roughly 25% of plan sponsors are interested in adding a PLESA to their plan. However, thus far employer uptake has remained near zero, in part due to lingering regulatory questions and hesitancy on the part of service providers.

To address this uncertainty, the IRS issued Notice 2024-22 (the “PLESA Notice”) and the Department of Labor issued FAQs (the “DOL FAQs”). Highlights of this new PLESA guidance are summarized below:

If you would like additional information about PLESAs or SECURE 2.0 generally, please contact the authors of this alert or your Miller Canfield attorney.