Experimental Emergency Savings Accounts Primed for Action

Select retirement savers are getting a much-discussed financial tool: employer-sponsored emergency savings accounts.

Financial services firm Prudential last summer put years of theory into practice, developing built-in savings accounts linked to the retirement savings plans typically offered to U.S. workers. Whereas 401(k)s are designed to grow pre-tax contributions derived from employee salaries until retirement, these auxiliary accounts accept already taxed funds that participants can access as needed. The only thing taxable in the new accounts is accrued earnings.

Freeing up cash to deal with unexpected expenses such as automotive repairs and medical bills is supposed to dissuade retirement plan participants ...