- T. Rowe Price launches pension-linked emergency savings accounts, an industry-first initiative.
- The SECURE 2.0 Act enables non-highly compensated employees to save up to $2,500 for emergencies.
- 64% of T. Rowe Price's 401(k) participants lack adequate emergency savings to cover six months of expenses.
T. Rowe Price (TROW, Financial), a global investment management firm, announced the introduction of its in-plan pension-linked emergency savings accounts (ESAs) for retirement plan participants. This pioneering feature, supported by the SECURE 2.0 Act of 2022, allows non-highly compensated employees to allocate up to $2,500 towards emergency expenses within their 401(k), 403(b), or governmental 457(b) plans. The initiative aims to alleviate the financial burden of unexpected emergencies while fostering a savings culture.
Research conducted by T. Rowe Price revealed that 64% of its 401(k) participants are unable to meet six months' worth of expenses from their savings. Anticipating an industry shift, 70% of advisors expect a rise in the adoption of in-plan solutions in the next 3-5 years, with 52% predicting an increase in out-of-plan solutions.
Beyond ESAs, T. Rowe Price offers other emergency savings solutions, including an out-of-plan savings app and the option to withdraw up to $1,000 penalty-free for emergency expenses from retirement plans. Contributions exceeding the $2,500 ESA limit will automatically be converted to non-ESA Roth contributions, enhancing flexibility for retirement planners.
With its commitment to innovation, T. Rowe Price continues to cater to the evolving needs of retirement savers, helping them navigate financial challenges and ensure long-term financial security. T. Rowe Price manages $1.57 trillion in assets, with approximately two-thirds linked to retirement-related investments, solidifying its position as a leader in the retirement services industry.
