In This Article:
The in-plan emergency savings accounts, believed to be an industry first, allows retirement savers the ability to directly contribute to emergency savings
BALTIMORE, April 22, 2025 /PRNewswire/ -- T. Rowe Price, a global investment management firm and a leader in retirement, today 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 governmental 457(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.
"As a leader in retirement, T. Rowe Price is proud to lead the charge in the industry with its in-plan emergency savings accounts," said Francisco Negrón, head of Retirement Plan Services at T. Rowe Price. "For many, emergency expenses can be a barrier to saving for retirement. ESAs expand our retirement plan offering and can give retirement savers more confidence about handling the unexpected while staying on the path toward a secure retirement."
T. Rowe Price recently found that 64% of its 401(k) participants, who responded to a financial wellness questionnaire 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.
"Every retirement product T. Rowe Price brings to market is grounded in thoughtful research and a deep understanding of the evolving needs of retirement savers," said Dennis Elliott, head of Retirement Plan Services products and platforms at T. Rowe Price. "It is this commitment to insight-driven innovation that keeps us ahead of the curve and focused on providing solutions that can drive better retirement outcomes for our clients."
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.