When faced with an emergency expense, many workers borrow from high-interest credit cards or raid their 401(k) ­accounts. That’s because 40% of American households struggle to cover a $400 emergency expense such as a car repair or an out-of-pocket medical bill, according to a recent Federal Reserve study. Meanwhile, the median unanticipated expense is a heftier $2,000, according to a Pew Charitable Trusts study. 

To help employees avoid being tripped up by an unexpected event, a growing number of companies now offer rainy-day savings programs to lessen the toll that short-term money problems may take on the productivity of workers and their ability to save for retirement. 

How emergency savings plans work…

Many companies use cash incentives to motivate employees to participate. Clothing maker Levi Strauss, in a program administered by the nonprofit EARN, offers a dollar-for-dollar match, up to $240 in a six-month period, for employees who contribute to an emergency savings account. SunTrust Bank gives workers as much as $1,000 in its Momentum onUp program if they complete a financial education course and agree to make contributions of at least $20 per pay period to emergency savings. The program also is offered to employees at Delta Airlines and The Home Depot.

Another approach: Prudential Financial, which administers defined-­contribution retirement plans for companies, offers an emergency savings feature tied to 401(k) accounts. How it works: After-tax contributions are automatically taken from your payroll check. They can be invested and grow on a tax-deferred basis. (For 2019, the limit on 401(k) contributions, including before- and after-tax, is $56,000—or $62,000 if you are 50 or over.) You are allowed to withdraw the after-tax contributions at any time, free of taxes and penalties. But any earnings on the contributions are subject to income tax and a 10% penalty if withdrawn before age 59½.

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