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While auto enrollment is set to significantly boost retirement participation, it comes with a critical caveat: an anticipated surge in retirement leakage. As workers unexpectedly discover accumulated funds in their retirement accounts, many are likely to withdraw prematurely, especially those living paycheck to paycheck.
"This trend underscores a crucial gap in financial wellness strategies – the absence of accessible emergency savings," said Sid Pailla, CEO, Sunny Day Fund. "Despite SECURE Act 2.0′s in-plan PLESA provisions, plan sponsors overwhelmingly prefer out-of-plan Emergency Savings Accounts (ESAs) for their flexibility, ERISA independence, and alignment with holistic financial health practices."
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