Sponsors (4)
The bill broadens and clarifies who can use emergency‑savings features and fixes a $5,000 limit—improving access and legal certainty—while shifting additional administrative and compliance costs to employers and possibly removing a permissible account option for some participants.
Retirement plan participants — including some higher‑paid employees — will newly qualify as eligible for emergency savings features and are expressly treated as eligible when they meet a plan's age/service/other requirements, expanding access to short‑term retirement savings.
Small‑business owners, plan administrators, and participants get clearer legal guidance because the bill explicitly fixes the malformed numeric fragment and sets the monetary limit at $5,000, reducing ambiguity for plan administration and taxpayer compliance.
Small‑business plan sponsors and employers may face higher administrative and funding burdens if more employees — including higher‑paid workers — become eligible for emergency savings features.
Plans, advisers, and employers will incur transition and compliance costs to update plan documents and systems to reflect the statutory text changes.
Some participants could lose a permissible account option or flexibility because the bill removes clause (ix) from the statutory list, potentially reducing available benefits for affected accounts.
Based on analysis of 4 sections of legislative text.
Broadens who qualifies as an eligible participant in pension-linked emergency savings accounts, deletes a listed clause, and clarifies a $5,000 limit in the statutes.
Makes targeted changes to federal rules for pension-linked emergency savings accounts and the Internal Revenue Code definition of eligible participants, broadening who can use these accounts and correcting a numeric limit to $5,000. The amendments remove a prior exclusion of highly compensated employees from the definition of "eligible participant," delete a listed clause in the statutory list of permitted items, and formally set a $5,000 figure where a malformed numeric string appeared. The changes apply to taxable years beginning after December 31, 2026 (i.e., effective January 1, 2027) and will require plan sponsors, plan documents, and tax administrators to update operations and guidance to reflect the new eligibility rules and the clarified dollar limit.
Official title: Modify the eligibility requirements and account contribution maximum for pension-linked emergency savings accounts, and for other purposes.
Introduced December 3, 2025 by Todd Young · Last progress December 3, 2025