A recent Empower study found that 37% of Americans couldn't afford an emergency expense over $400, and 21% have no emergency savings at all. The SECURE 2.0 Act created new tools to help workers build emergency funds alongside their retirement savings, but surprisingly few employers have adopted them.
Here's what you need to know about these features and how to find out if your plan offers them.
Two New Emergency Savings Options
The $1,000 Emergency Withdrawal
Since 2024, retirement plans can allow participants to withdraw up to $1,000 per year for personal or family emergencies without paying the 10% early withdrawal penalty. You can self-certify that you have an emergency—no documentation required.
The catch: You can't take another emergency withdrawal for three years unless you repay the original amount or make new contributions equal to what you withdrew.
According to Vanguard, only 4% of 401(k) plans have adopted this provision so far.
Pension-Linked Emergency Savings Accounts (PLESAs)
This more comprehensive option allows employers to offer a separate emergency savings account linked to your 401(k). Key features include:
- After-tax Roth contributions up to $2,600 in 2026
- Tax-free withdrawals for any reason, no emergency required
- No penalty for withdrawals
- Employer matching still applies to your contributions
- Automatic enrollment option at up to 3% of pay
The first four withdrawals per year must be fee-free, and you can replenish the account as often as you like up to the cap.
Despite these benefits, Vanguard reports PLESAs have generated "minimal to no interest" among plan sponsors.
Why Adoption Is So Low
Several factors explain the gap between these available benefits and actual implementation:
Administrative complexity. Some plan administrators consider PLESAs an "administrative nightmare" requiring new record-keeping systems and compliance procedures.
Philosophical concerns. Many employers believe 401(k) plans should focus solely on retirement, not short-term savings.
Existing alternatives. About 94% of employers already allow hardship withdrawals from retirement accounts, though these typically require documentation and may carry penalties.
Why You Should Ask Your Employer
Even with low adoption rates, these features can significantly improve your financial security. Having accessible emergency savings can prevent you from:
- Taking penalty-heavy early withdrawals from retirement accounts
- Accumulating high-interest credit card debt
- Depleting your retirement savings during financial crises
If you can't afford an unexpected $400 expense—as more than one-third of Americans report—having emergency savings within your workplace plan could provide crucial protection.
Questions to Ask Your HR Department
Consider asking your benefits administrator:
- Does our 401(k) plan offer penalty-free emergency withdrawals under SECURE 2.0?
- Has the company considered adding a pension-linked emergency savings account?
- What options exist for accessing funds in a true emergency?
- Can I split my direct deposit between retirement savings and an emergency fund?
Building Emergency Savings Alongside Retirement
Even if your employer hasn't adopted these new features, you can still build emergency savings systematically:
- Split your direct deposit between retirement contributions and a high-yield savings account
- Start small with even $25-50 per paycheck for emergencies
- Automate contributions so savings happen before you can spend the money
- Aim for three to six months of essential expenses as your target
The Bottom Line
SECURE 2.0 created powerful new tools for linking emergency and retirement savings, but employer adoption remains limited. Don't wait for your company to act—ask about available options and advocate for features that could benefit you and your coworkers. In the meantime, building any emergency buffer, whether inside or outside your retirement plan, strengthens your overall financial security.
Sources: CNBC, Vanguard, Empower, Fidelity, Segal