---
kind: "section"
citation: "29 U.S.C. § 1193"
title: "29"
title_heading: "Labor"
number: "1193"
heading: "Pension-linked emergency savings accounts"
release: "119-102"
url: "https://uscodex.org/usc/29/1193"
units:
  - "Chapter 18 — Employee Retirement Income Security Program"
  - "Subchapter I — Protection of Employee Benefit Rights"
  - "Subtitle B — Regulatory Provisions"
  - "Part 8 — pension-linked emergency savings accounts"
---

# §1193. Pension-linked emergency savings accounts

- (a) **In general—** A [plan sponsor](/usc/29/1002.md?p=16-B) of an [individual account plan](/usc/29/1002.md?p=34) may—
  - (1) include in such [individual account plan](/usc/29/1002.md?p=34) a [pension-linked emergency savings account](/usc/29/1002.md?p=45) meeting the requirements of [subsection (c)](#c); and
  - (2)
    - (A) offer to enroll an [eligible participant](#b-1) in such [pension-linked emergency savings account](/usc/29/1002.md?p=45); or
    - (B) automatically enroll an [eligible participant](#b-1) in such account pursuant to an automatic contribution arrangement described in [paragraph (2)](#c-2) of subsection (c).
- (b) **Eligible participant—**
  - (1) **In general—** For purposes of this part, the term “eligible participant”, with regard to an [individual account plan](/usc/29/1002.md?p=34), means an individual who—
    - (A) meets any age, service, and other eligibility requirements of the plan; and
    - (B) is not a [highly compensated employee](#b-3).
  - (2) **Eligible participant who becomes a highly compensated employee—** Notwithstanding [paragraph (1)(B)](#b-1-B), an individual who is enrolled in a [pension-linked emergency savings account](/usc/29/1002.md?p=45) and thereafter becomes a [highly compensated employee](#b-3) may not make further contributions to such account, but retains the right to withdraw any account balance of such account in accordance with [subsection (c)(1)(A)(ii)](#c-1-A-ii).
  - (3) **Definition—** For purposes of this subsection, the term “highly compensated employee” has the meaning given the term in [section 414(q) of title 26](/usc/26/414.md?p=q).
- (c) **Account requirements—**
  - (1) **In general—** A [pension-linked emergency savings account](/usc/29/1002.md?p=45)—
    - (A) shall—
      - (i) not have a minimum contribution or account balance requirement;
      - (ii) allow for withdrawal by the [participant](/usc/29/1002.md?p=7) of the account balance, in whole or in part at the discretion of the [participant](/usc/29/1002.md?p=7), at least once per calendar month and for distribution of such withdrawal to the [participant](/usc/29/1002.md?p=7) as soon as practicable from the date on which the [participant](/usc/29/1002.md?p=7) elects to make such withdrawal; and
      - (iii) be, as selected by the [plan sponsor](/usc/29/1002.md?p=16-B), held as cash, in an interest-bearing deposit account, or in an investment product—
        - (I) designed to—
          - (aa) maintain over the term of the investment, the dollar value that is equal to the amount invested in the product; and
          - (bb) preserve principal and provide a reasonable rate of return, whether or not such return is guaranteed, consistent with the need for liquidity; and
        - (II) offered by a [State](/usc/29/1002.md?p=10)- or federally-regulated financial institution;
    - (B) may be subject to, as permitted by the [Secretary](/usc/29/1002.md?p=13), reasonable restrictions; and
    - (C)
      - (i) may not, for not less than the first 4 withdrawals of [funds](/usc/29/1301.md?p=a-5) from the account in a [plan year](/usc/29/1002.md?p=39), be subject to any fees or charges solely on the basis of such a withdrawal; and
      - (ii) may, for any subsequent withdrawal in a [plan year](/usc/29/1002.md?p=39), be subject to reasonable fees or charges in connection with such a withdrawal, including reasonable reimbursement fees imposed for the incidental costs of handling of paper checks.
  - (2) **Establishment and termination of account—**
    - (A) **Establishment of account—** The [pension-linked emergency savings account](/usc/29/1002.md?p=45) feature shall be included in the plan document of the [individual account plan](/usc/29/1002.md?p=34). Such [individual account plan](/usc/29/1002.md?p=34) shall—
      - (i) separately account for contributions to the [pension-linked emergency savings account](/usc/29/1002.md?p=45) of the [individual account plan](/usc/29/1002.md?p=34) and any earnings properly allocable to the contributions;
      - (ii) maintain separate recordkeeping with respect to each such [pension-linked emergency savings account](/usc/29/1002.md?p=45); and
      - (iii) allow withdrawals from such account in accordance with [section 402A(e)(7) of title 26](/usc/26/402A.md?p=e-7).
    - (B) **Termination of account—** A [plan sponsor](/usc/29/1002.md?p=16-B) may terminate the [pension-linked emergency savings account](/usc/29/1002.md?p=45) feature of an [individual account plan](/usc/29/1002.md?p=34) at any time.
- (d) **Account contributions—**
  - (1) **Limitation—**
    - (A) **In general—** Subject to [subparagraph (B)](#d-1-B), no contribution shall be accepted to a [pension-linked emergency savings account](/usc/29/1002.md?p=45) to the extent such contribution would cause the portion of the account balance attributable to [participant](/usc/29/1002.md?p=7) contributions to exceed the lesser of—
      - (i) $2,500; or
      - (ii) an amount determined by the [plan sponsor](/usc/29/1002.md?p=16-B) of the [pension-linked emergency savings account](/usc/29/1002.md?p=45).

      In the case of contributions made in taxable years beginning after December 31, 2024, the [Secretary](/usc/29/1002.md?p=13) shall adjust the amount under [clause (i)](#d-1-A-i) at the same time and in the same manner as the adjustment made by the [Secretary of the Treasury](/usc/29/1301.md?p=b-2-B) under [section 415(d) of title 26](/usc/26/415.md?p=d), except that the base period shall be the calendar quarter beginning July 1, 2023. Any increase under the preceding sentence which is not a multiple of $100 shall be rounded to the next lowest multiple of $100.

    - (B) **Excess contributions—** To the extent any contribution to the [pension-linked emergency savings account](/usc/29/1002.md?p=45) of a [participant](/usc/29/1002.md?p=7) for a taxable year would exceed the limitation of [subparagraph (A)](#d-1-A)—
      - (i) in the case of a [participant](/usc/29/1002.md?p=7) with another designated Roth account under the [individual account plan](/usc/29/1002.md?p=34), such plan may provide that—
        - (I) the [participant](/usc/29/1002.md?p=7) may elect to increase the [participant](/usc/29/1002.md?p=7)’s contribution to such other account; and
        - (II) in the absence of such a [participant](/usc/29/1002.md?p=7) election, the [participant](/usc/29/1002.md?p=7) is deemed to have elected to increase the [participant](/usc/29/1002.md?p=7)’s contributions to such other account at the rate at which contributions were being made to the [pension-linked emergency savings account](/usc/29/1002.md?p=45); and
      - (ii) in any other case, such plan shall provide that such excess contributions will not be accepted.
  - (2) **Automatic contribution arrangement—** For purposes of this section—
    - (A) **In general—** An automatic contribution arrangement described in this paragraph is an arrangement under which an [eligible participant](#b-1) is treated as having elected to have the [plan sponsor](/usc/29/1002.md?p=16-B) make elective contributions to a [pension-linked emergency savings account](/usc/29/1002.md?p=45) at a [participant](/usc/29/1002.md?p=7) contribution rate that is not more than 3 percent of the compensation of the [eligible participant](#b-1), unless the [eligible participant](#b-1), at any time (subject to such reasonable advance notice as is required by the plan [administrator](/usc/29/1002.md?p=16-A)), affirmatively elects to—
      - (i) make contributions at a different rate or amount; or
      - (ii) opt out of such contributions.
    - (B) **Participant contribution rate—** For purposes of an automatic contribution arrangement described in [subparagraph (A)](#d-2-A), the [plan sponsor](/usc/29/1002.md?p=16-B)—
      - (i) shall select a [participant](/usc/29/1002.md?p=7) contribution rate under such automatic contribution arrangement that meets the requirements of [subparagraph (A)](#d-2-A); and
      - (ii) may amend (prior to the [plan year](/usc/29/1002.md?p=39) in which an amendment would take effect) such rate not more than once annually.
  - (3) **Disclosure by plan administrator of contributions—**
    - (A) **In general—** With respect to an [individual account plan](/usc/29/1002.md?p=34) with a [pension-linked emergency savings account](/usc/29/1002.md?p=45) feature, the [administrator](/usc/29/1002.md?p=16-A) of the plan shall, not less than 30 days and not more than 90 days prior to date of the first contribution to the [pension-linked emergency savings account](/usc/29/1002.md?p=45), including any contribution under an automatic contribution arrangement described in [subsection (d)(2)](#d-2), or the date of any adjustment to the [participant](/usc/29/1002.md?p=7) contribution rate under [subsection (d)(2)(B)(ii)](#d-2-B-ii), and not less than annually thereafter, shall furnish to the [participant](/usc/29/1002.md?p=7) a notice describing—
      - (i) the purpose of the account, which is for short-term, emergency savings;
      - (ii) the limits on, and tax treatment of, contributions to the [pension-linked emergency savings account](/usc/29/1002.md?p=45) of the [participant](/usc/29/1002.md?p=7);
      - (iii) any fees, expenses, restrictions, or charges associated with such [pension-linked emergency savings account](/usc/29/1002.md?p=45);
      - (iv) procedures for electing to make contributions to or opting out of the [pension-linked emergency savings account](/usc/29/1002.md?p=45), for changing [participant](/usc/29/1002.md?p=7) contribution rates for such [pension-linked emergency savings account](/usc/29/1002.md?p=45), and for making [participant](/usc/29/1002.md?p=7) withdrawals from such [pension-linked emergency savings account](/usc/29/1002.md?p=45), including any limits on frequency;
      - (v) as applicable, the amount of the intended contribution to such [pension-linked emergency savings account](/usc/29/1002.md?p=45) or the change in the percentage of the compensation of the [participant](/usc/29/1002.md?p=7) of such contribution;
      - (vi) the amount in the emergency savings account and the amount or percentage of compensation that a [participant](/usc/29/1002.md?p=7) has contributed to the [pension-linked emergency savings account](/usc/29/1002.md?p=45);
      - (vii) the designated investment option under [subsection (c)(1)(A)(iii)](#c-1-A-iii) for amounts contributed to the [pension-linked emergency savings account](/usc/29/1002.md?p=45);
      - (viii) the options under [subsection (e)](#e) for the account balance of the [pension-linked emergency savings account](/usc/29/1002.md?p=45) after termination of the employment of the [participant](/usc/29/1002.md?p=7) or termination by the [plan sponsor](/usc/29/1002.md?p=16-B) of the [pension-linked emergency savings account](/usc/29/1002.md?p=45); and
      - (ix) the ability of a [participant](/usc/29/1002.md?p=7) who becomes a highly compensated employee (as such term is defined in [paragraph (3)](#b-3) of subsection (b)) to, as described in [paragraph (2)](#d-2) of such subsection, withdraw any account balance from a [pension-linked emergency savings account](/usc/29/1002.md?p=45) and the restriction on the ability of such a [participant](/usc/29/1002.md?p=7) to make further contributions to the [pension-linked emergency savings account](/usc/29/1002.md?p=45).
    - (B) **Notice requirements—** A notice furnished to a [participant](/usc/29/1002.md?p=7) under [subparagraph (A)](#d-3-A) shall be—
      - (i) sufficiently accurate and comprehensive to apprise the [participant](/usc/29/1002.md?p=7) of the rights and obligations of the [participant](/usc/29/1002.md?p=7) with regard to the [pension-linked emergency savings account](/usc/29/1002.md?p=45) of the [participant](/usc/29/1002.md?p=7); and
      - (ii) written in a manner calculated to be understood by the average [participant](/usc/29/1002.md?p=7).
    - (C) **Consolidated notices—** The required notices under [subparagraph (A)](#d-3-A) may be included with any other notice under this chapter, including under section [1104(c)(5)(B)](/usc/29/1104.md?p=c-5-B) or [1144(e)(3)](/usc/29/1144.md?p=e-3) of this title, or under section [401(k)(13)(E)](/usc/26/401.md?p=k-13-E) or [414(w)(4)](/usc/26/414.md?p=w-4) of title 26, if such other notice is provided to the [participant](/usc/29/1002.md?p=7) at the time required for such notice.
  - (4) **Employer matching contributions to an individual account plan for employee contributions to a pension-linked emergency savings account—**
    - (A) **In general—** If an [employer](/usc/29/1002.md?p=5) makes any [matching contributions](#d-4-C) to an [individual account plan](/usc/29/1002.md?p=34) of which a [pension-linked emergency savings account](/usc/29/1002.md?p=45) is part, subject to the limitations of [paragraph (1)(A)](#d-1-A), the [employer](/usc/29/1002.md?p=5) shall make [matching contributions](#d-4-C) on behalf of a [participant](/usc/29/1002.md?p=7) on account of the contributions by the [participant](/usc/29/1002.md?p=7) to the [pension-linked emergency savings account](/usc/29/1002.md?p=45) at the same rate as any other [matching contribution](#d-4-C) on account of an elective contribution by such [participant](/usc/29/1002.md?p=7). The [matching contributions](#d-4-C) shall be made to the [participant](/usc/29/1002.md?p=7)’s account under the [individual account plan](/usc/29/1002.md?p=34) that is not the [pension-linked emergency savings account](/usc/29/1002.md?p=45). Such [matching contributions](#d-4-C) on account of contributions under [paragraph (1)(A)](#d-1-A) shall not exceed the maximum account balance under [paragraph (1)(A)](#d-1-A) for such [plan year](/usc/29/1002.md?p=39).
    - (B) **Coordination rule—** For purposes of any applicable limitation on [matching contributions](#d-4-C), any [matching contributions](#d-4-C) made under the plan shall be treated first as attributable to the elective deferrals of the [participant](/usc/29/1002.md?p=7) other than contributions to a [pension-linked emergency savings account](/usc/29/1002.md?p=45).
    - (C) **Matching contributions—** For purposes of [subparagraph (A)](#d-4-A), the term “matching contribution” has the meaning given such term in [section 401(m)(4) of title 26](/usc/26/401.md?p=m-4).
- (e) **Account balance after termination—** Upon termination of employment of the [participant](/usc/29/1002.md?p=7), or termination by the [plan sponsor](/usc/29/1002.md?p=16-B) of the [pension-linked emergency savings account](/usc/29/1002.md?p=45), the [pension-linked emergency savings account](/usc/29/1002.md?p=45) of such [participant](/usc/29/1002.md?p=7) in an [individual account plan](/usc/29/1002.md?p=34) shall—
  - (1) allow, at the election of the [participant](/usc/29/1002.md?p=7), for transfer by the [participant](/usc/29/1002.md?p=7) of the account balance of such account, in whole or in part, into another designated Roth account of the [participant](/usc/29/1002.md?p=7) under the [individual account plan](/usc/29/1002.md?p=34); and
  - (2) for any amounts in such account not transferred under [paragraph (1)](#e-1), make such amounts available within a reasonable time to the [participant](/usc/29/1002.md?p=7).
- (f) **Anti-abuse rules—**
  - (1) **In general—** A plan of which a [pension-linked emergency savings account](/usc/29/1002.md?p=45) is part—
    - (A) may employ reasonable procedures to limit the frequency or amount of [matching contributions](#d-4-C) with respect to contributions to such account, solely to the extent necessary to prevent manipulation of the rules of the plan to cause [matching contributions](#d-4-C) to exceed the intended amounts or frequency; and
    - (B) shall not be required to suspend [matching contributions](#d-4-C) following any [participant](/usc/29/1002.md?p=7) withdrawal of contributions, including elective deferrals and [employee](/usc/29/1002.md?p=6) contributions, whether or not matched and whether or not made pursuant to an automatic contribution arrangement described in [section 402A(e)(4) of title 26](/usc/26/402A.md?p=e-4).
  - (2) **Regulations or other guidance—** The [Secretary of the Treasury](/usc/29/1301.md?p=b-2-B), in consultation with the [Secretary](/usc/29/1002.md?p=13) of Labor, shall issue regulations or other guidance not later than 12 months after December 29, 2022, with respect to the anti-abuse rules described in [paragraph (1)](#f-1).

## Source credit

(Pub. L. 93–406, title I, § 801, as added Pub. L. 117–328, div. T, title I, § 127(b)(1), Dec. 29, 2022, 136 Stat. 5318.)

## Notes

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable to plan years beginning after Dec. 31, 2023, see section 127(g) of Pub. L. 117–328, set out as an Effective Date of 2022 Amendment note under section 72 of Title 26, Internal Revenue Code.