S. 3333 — Emergency Savings Enhancement Act of 2025

This section eliminates the exclusion of highly compensated employees from the definition of eligible participant for pension-linked emergency savings accounts (PLESAs) in individual account plans (e.g., 401(k) plans), such that eligibility is based solely on a participant's satisfaction of the plan's age, service, and other requirements. (As background, PLESAs enable participants to save for emergencies within their retirement plan, with no minimum contributions or balances, penalty-free withdrawals at least monthly, no fees on the first four withdrawals per plan year, and an annual contribution limit equal to the lesser of a specified dollar amount or the plan's elective deferral limit.) It also increases that specified annual contribution limit to $5,000 (from $2,500) and makes conforming amendments to employer matching contribution provisions.

This section amends IRC §402A(e), which governs pension-linked emergency savings accounts (PLESAs) (i.e., Roth-designated accounts within employer-sponsored defined contribution plans for short-term emergency savings), as follows: (1) revises the definition of eligible participant to include any individual meeting the plan's age, service, and other eligibility requirements, without regard to whether the individual is otherwise a participant in the plan; (2) increases the annual contribution limit to $5,000 (from $2,500); and (3) makes conforming amendments to §402A(e)(5)(A) by striking clause (ix).