Americans See Their 401(k)s Not Just as Nest Eggs but as Rainy Day Funds

More companies, including Starbucks and Delta Air Lines, are letting workers divert a portion of their paychecks into emergency funds. The new law also lets employers automatically enroll workers earning less than $160,000 into emergency savings accounts. They can save up to $2,500 in a money market-type fund in a Roth 401(k) and withdraw it tax- and penalty-free. These emergency funds may help people avoid pulling money directly from their 401(k) investments. Vanguard found those with $2,000 or more in emergency savings are significantly less likely to cash out their 401(k)s or take hardship withdrawals. Misty Scammahorn, 47, said she opened a high-yield bank account three years ago from Sunny Day Fund Solutions, which offers employer-sponsored emergency funds. She has since saved $12,000 through automated payroll deductions

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