T. Rowe Price: T. Rowe Price Launches Pension-Linked Emergency Savings Accounts

T. Rowe Price announced the launch of its in-plan emergency savings accounts (ESAs) for retirement plan participants, believed to be an industry first. The solution is made possible by the passage of the SECURE 2.0 Act of 2022 which includes a provision for pension-linked emergency savings accounts that allows non- highly compensated employees to save up to $2,500 toward emergency expenses within their 401(k), 403(b) or governmental457(b), if permitted by the plan. Once they have reached the $2,500 limit, any additional contributions are automatically converted to non-ESA Roth contributions toward their retirement account. T. Rowe Price recently found that 64% of its 401(k) participants, who responded to a financial wellness question hosted by the firm, are unable to cover six months' worth of expenses. Meanwhile, Emergency savings solutions, one of the themes from the firm's Retirement Market Outlook for 2025, are expected to gain traction in the industry, with 70% of advisors and consultants anticipating a rise in in-plan solutions and 52% expecting an increase in out-of-plan solutions within three to five years. ESAs are the latest addition to T. Rowe Price Retirement Plan Services' suite of emergency savings solutions, including an out-of-plan savings app that allows employees the ability to save three to six months of expenses toward emergency savings. The firm also supports emergency expense withdrawals, which allow employees to withdraw up to $1,000, penalty-free, from their retirement plan for emergency expenses. T. Rowe Price plan sponsor clients are able to adopt one or any combination of the optional solutions, giving them the flexibility to offer what will help best support the diverse needs of their employees. T. Rowe Price announced the launch of its in-plan emergency savings accounts (ESAs) for retirement plan participants, believed to be an industry first. The solution is made possible by the passage of the SECURE 2.0 Act of 2022 which includes a provision for pension-linked emergency savings accounts that allows non- highly compensated employees to save up to $2,500 toward emergency expenses within their 401(k), 403(b) or governmental457(b), if permitted by the plan. Once they have reached the $2,500 limit, any additional contributions are automatically converted to non-ESA Roth contributions toward their retirement account. T. Rowe Price recently found that 64% of its 401(k) participants, who responded to a financial wellness question hosted by the firm, are unable to cover six months' worth of expenses. Meanwhile, Emergency savings solutions, one of the themes from the firm's Retirement Market Outlook for 2025, are expected to gain traction in the industry, with 70% of advisors and consultants anticipating a rise in in-plan solutions and 52% expecting an increase in out-of-plan solutions within three to five years. ESAs are the latest addition to T. Rowe Price Retirement Plan Services' suite of emergency savings solutions, including an out-of-plan savings app that allows employees the ability to save three to six months of expenses toward emergency savings. The firm also supports emergency expense withdrawals, which allow employees to withdraw up to $1,000, penalty-free, from their retirement plan for emergency expenses. T. Rowe Price plan sponsor clients are able to adopt one or any combination of the optional solutions, giving them the flexibility to offer what will help best support the diverse needs of their employees.