PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Senators Think You Should Save More

By Sarah Grotta
July 18, 2022
in Analysts Coverage, Credit, Savings
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
savings

Money, savings, bank.

For many people, saving for retirement can seem like a daunting task. However, there are a number of employers who offer programs that can help their employees save for the future. One such program is payroll deduction, which allows employers to deduct a certain amount of money from each paycheck and deposit it into a savings account. Another common retirement savings program is a 401k, which allows employees to set aside a portion of their income for retirement. Employers often match a percentage of employee contributions, making 401ks an especially powerful tool for saving for the future.

The Emergency Savings Act of 2022

Congress is playing at financial product development again.  Nasdaq reports that a bill has been introduced that would encourage employers to convince employees to set aside a small amount of money ($2,500 annual maximum, according to the article) into an account that could earn interest.  The contributions are directly from consumer’s earned payroll.  Unlike 401K plans, or healthcare savings plans, these accounts don’t offer a tax benefit.  Without a tax benefit, I’m not sure why legislation is needed.  Employees can set aside money from their paycheck to go directly into a savings account today.  Many employers encourage this activity and some even offer matching.  I am not sure we need a bill to codify what is already available.  If you have more background, please contact me.

Here are some more details from the article:

The Emergency Savings Act of 2022 was introduced in May by Senators Cory Booker (D-NJ) and Todd Young (R-IN). It establishes so-called Pension-Linked Emergency Funds, which will help employees save for emergencies through payroll deductions and help improve their personal finances.

While the emergency funds are tied to employer retirement plans, they aren’t limited to pension plans. Instead, a Pension-Linked Emergency Fund may be linked to a defined contribution plan, such as a 401(k).

At its core, a Pension-Linked Emergency Fund is an emergency fund that is managed like an employer-sponsored retirement plan. Funding of the emergency fund is similar to funding a 401(k), with deferred contributions automatically being deducted from one’s paycheck. Unlike a 401(k) contribution, an emergency fund contribution would not include any tax benefits, meaning that any contributions are fully taxable as ordinary income. The bill contains a provision to allow automatic enrollment of up to 3% of compensation.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: Financial ServicesSavingsSavings Account

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    commercial card, Allpay ClearBank Prepaid Payments, wealth transfer

    How Banks Can Capture the Wealth Transfer from Boomers to Gen Z

    June 20, 2025
    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result