IRS Sets Anti-Abuse Limits on 401(k) Emergency Savings Measures

Workplace retirement plan sponsors trying to prevent employees from abusing newly authorized 401(k)-linked emergency savings accounts won’t be allowed to suspend participant contributions or matches, according to new IRS guidance.

The guidance (IRS Notice 2024-22) issued Friday outlines what steps are too far for employers to go, but doesn’t provide any suggestions for actually preventing worker abuses.

The SECURE 2.0 Act (Pub. L. No. 117-328) Congress passed in late 2022 allows employers to help workers who don’t qualify as highly compensated to save for a rainy day by contributing up to $2,500 eligible for matching into a liquid ...