A recent focus group exercise showed that consumers may prefer a more generous emergency savings benefit option for possible financial emergencies.

The exercise by Commonwealth, a national financial nonprofit, took a close look at two provisions in the recent SECURE 2.0 Act. Those provisions specifically address an issue that has hampered retirement savings for some workers—emergency expenses.

When workers draw from retirement accounts such as 401(k)s, they can incur penalties as well as reduce the amount of retirement savings that they have. The SECURE 2.0 Act attempted to lessen that impediment on retirement savings by allowing employers to offer two options, a $1,000 annual benefit (to be repaid within three years) taken from their retirement account without penalties but subject to income tax; or a "pension-linked emergency savings account" (PLESA), capped at $2,500, which they contribute to through paycheck withdrawals, and which is matched by employers.

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