QOTW: Emergency Savings Accounts

No organizations currently facilitate an emergency savings account, but many are interested in doing so. Many organizations said that they are currently discussing these accounts and evaluating how to implement and administer them. Other organizations said they currently address the topic through education and/or through their financial wellness programs. Still other organizations have not considered this all. Comments included:

• Before Covid, we implemented a financial wellness program - then covid hit and screwed it all up!
• Considering it.
• Currently, we have not look at this option.
• Fully believe that this is a person's first step to becoming debt free.
• Given the focus on overall wellness, I think facilitating an emergency savings account--perhaps through payroll deduction with a specified savings goal--would be a very timely initiative.
• Great idea. We focus more energy on saving for retirement.
• I love the concept, think that sounds like a valuable process to the team members
• I think is a good idea.
• I've never heard of this, and would like to know more. Specifically can employees put this money away on a pre-tax basis? Does the employer have to maintain plan documents and a policy for this type of account?
• Love the concept, not many compelling options to offer it as an employer.
• No, but intriguing thought. I would like to research this as part of our personal budgeting education.
• Not currently, but it is being discussed.
• Payroll deposits can be split. But we haven't suggested creating an emergency savings account.
• Should be available to every employee at every company
• The company does have a financial wellness program that could help facilitate this.
• This topic is part of our ongoing financial education.
• We are considering as a future enhancement
• We are currently looking at this but it's not implemented
• We are discussing this and how to administer.
• We are looking to potentially put this into place in 2022, or at the very least provide education on the importance of these accounts.
• We are looking very seriously at this for this year and would be interested in any vendors that other plan sponsors are using and would recommend.
• We currently do not, but looking at potentially doing so in the future.
• We do have an account employees may borrow funds from for emergency needs.
• We have an after-tax account available in our 401(k) plan, but it is not promoted as an emergency savings account.
• We have not even considered this.
• We would like to do it but have not yet found anything better than our credit union.
• While we do not facilitate an account, employees are educated on the importance of having an emergency savings account. Our vendor allows for employees to create employees savings should they choose.
• While we don't have a specific emergency savings account, we have a lot of education to folks to use pre-tax and Roth for retirement but to consider also putting in some traditional after-tax contributions (unmatched) that they can use for emergencies or withdrawal anytime... or leave in for additional retirement savings. I think it helps!
• Who defines "emergency"?  The organization?  The employee?  There might be differences on how one interprets emergency.
• Wish we would do that for people.  Too many use their 401k as that emergency account and get into a cycle of taking out loans.
• Would like to implement.

This is another trend that will be interesting to watch – it is certainly on the radar of many organizations and as they, and their providers, work out the implementation and administration of these kinds of accounts, I think we’re going to see this grow in popularity. It will also be interesting to see how organizations position emergency savings accounts in relation to their retirement plans – if it will impact savings rates and loan rates in the long run.