Richard Neal

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Beginning January 1, 2027, employers offering 401(k) or 403(b) plans may — but are not required to — offer pension-linked emergency savings accounts (PLESAs) that allow non-highly-compensated employees to set aside up to $2,500 in a liquid emergency fund within their employer plan. Contributions are made on a Roth (after-tax) basis and can be withdrawn without penalty. The provision addresses research showing that the primary reason workers prematurely tap retirement accounts is a lack of liquid emergency savings. Employers that auto-enroll employees into PLESAs must cap contributions at $2,500. Workers who withdraw funds are still eligible to contribute to the retirement plan.

The Congressional Budget Office estimated that H.R. 1, the One Big Beautiful Bill Act as passed by the House, would result in 10.9 million more people without health insurance in 2034, mostly due to cuts to Medicaid and the Affordable Care Act. The CBO found that the Medicaid portion of the bill would reduce enrollment by 7.8 million people. Another 1.3 million people would be without insurance due to changes in the Affordable Care Act. The bill would eliminate state-funded insurance for 1.4 million people without verified citizenship, nationality, or satisfactory immigration status. Federal spending on Medicaid and the Affordable Care Act would be reduced by $902 billion over a decade. The bill included new work requirements for childless Medicaid recipients without disabilities between the ages of 19 and 64, more frequent eligibility checks, and changes to how states can finance their share of the program costs.

The Department of Labor published a final rule lowering the Fair Labor Standards Act overtime salary threshold from $684 per week to $597 per week, reversing a Biden administration increase that had expanded overtime eligibility to approximately 4.3 million workers. The rollback restored the pre-2024 threshold, immediately removing overtime pay protections for an estimated 3 million salaried workers earning between $597 and $684 weekly. No congressional action was required because the threshold is set by executive rulemaking authority under the FLSA.

New 401(k) and 403(b) plans established after Dec 29, 2022 must automatically enroll eligible employees at 3–10% (escalating annually to max 15%). Enhanced catch-up contributions for ages 60–63 begin: the higher of $10,000 or 150% of the regular catch-up limit ($11,250 for 2025). Student loan payment-as-retirement-contribution matching also becomes effective.

529-to-Roth IRA rollovers become available (up to $35,000 lifetime, 15-year holding requirement). Emergency savings accounts linked to employer retirement plans become available — employees can contribute up to $2,500 in penalty-free accessible accounts alongside 401(k)s. Employers may treat emergency withdrawals as matching-eligible.