Young introduces bipartisan Emergency Savings Act

U.S. Sen. Todd Young (R-IN) on May 25 cosponsored a bipartisan bill to allow employers to offer pension-linked savings accounts that Americans could tap into for financial emergencies. 

“We can’t always predict the future, and too many Hoosier families encounter situations where they struggle to cover unexpected expenses through no fault of their own,” Sen. Young said. “Unfortunately, this can cause families to dip into their retirement savings, which harms their financial future. 

“Our bipartisan bill would help families create stable emergency savings for unforeseen expenses, while keeping retirement accounts intact for the future,” said Sen. Young.

The Emergency Savings Act of 2022, S. 4310, which is sponsored by U.S. Sen. Cory Booker (D-NJ), would allow employers to offer an optional Emergency Savings Account that could be added to a plan sponsor’s defined contribution plan, according to a bill summary provided by Sen. Young’s staff.

The maximum that could be saved in an Emergency Savings Account would be $2,500, although plan sponsors could choose to set a lower cap, the summary says, adding that the savings in an account would be made on an after-tax basis and could be withdrawn tax penalty-free at any time with permissible limitations on withdrawal frequency.

The bill builds upon work by Sens. Young and Booker to develop this concept over the last several years, including the Strengthening Financial Security Through Short-Term Savings Account Act of 2021, S. 2601, which they introduced last August to allow employers to enroll employees in short-term savings accounts that are funded using automatic contributions deducted from participating employees’ wages, according to the congressional record bill summary.

“I’m proud to work with Senator Young to address these savings crises by creating opportunities for workers to build savings for short-term, unexpected costs while also putting them on a pathway for a more financially secure retirement,” Sen. Booker said.

The Bipartisan Policy Center, the American Benefits Council, the U.S. Chamber of Commerce, and the National Taxpayers Union are among numerous groups to endorse S. 4310.