From Uniform to Workforce: How to Build Emergency Savings Through Your Job

For many Veterans and transitioning service members, building emergency savings can be tough. Whether it’s covering the gap between military pay and your first civilian paycheck, relocating for a new job, replacing a uniform with professional clothes, or handling an unexpected VA benefits delay, these situations can strain your finances. The truth is, most Americans, including many in the military and Veteran community, don’t have $1,000 saved to manage the unexpected.

That’s why a federal law called the SECURE 2.0 Act introduced new tools to help make saving easier. These tools are built into some civilian employers’ retirement plans, like a 401(k), and can help you build an emergency fund as you begin your next chapter after service.

Tool 1: Emergency Savings Account Linked to Your 401(k)

As you move into a civilian job, you might hear about something called a sidecar account or PLESA. That stands for Pension-Linked Emergency Savings Account. It’s a new type of savings account tied to your workplace retirement plan.

Here’s what you need to know:

• It’s an after-tax account, separate from your retirement savings
• You can contribute up to $2,500 per year
  
  
• Withdrawals are allowed at least once per month with no penalties
  
  
• The first four withdrawals per year must be fee-free
  
  
• Your money is kept in capital-preserving investments, like stable value or money market funds
  
  
• It’s designed for non-highly compensated employees, so many transitioning Veterans will qualify
  
  
• Not all employers offer this yet, so it’s worth checking with your HR or benefits team. 

Why Ask HR?

Many workplace savings benefits are opt-in, meaning they require you to actively enroll. Not all employers offer these tools yet, and even when they do, they’re not always automatically provided. Talking to your HR or benefits team is the best first step to understand what’s available to you, and how to access it.

Why it matters:This account gives you a way to build up emergency savings without dipping into your retirement or relying on high-interest credit cards or loans. That’s especially important during times of transition.

Tool 2: $1,000 Emergency Withdrawal From Your 401(k)

If you're already enrolled in a 401(k) at your new job, the SECURE 2.0 Act also gives you another option for handling emergencies.

You may be able to take a one-time $1,000 withdrawal from your 401(k) without paying the 10 percent early withdrawal penalty.

Here’s how it works:

• You can self-certify the emergency. No extra paperwork or approval required
• You’ll still pay regular income tax on the amount you withdraw
  
  
• You have three years to repay the money if you choose
  
  
• If you don’t repay, you’ll need to wait three calendar years before using this option again unless the funds are replenished
  
  

This tool is there when you need access to cash quickly. Just be sure to understand the rules and consider how it fits into your long-term retirement goals.

How to Use These Tools as a Veteran

Start by talking with your new employer’s HR or plan administrator. These tools are optional, so not all employers have them yet. But asking can help put them on the radar.

A few steps to get started:

• Enroll and set up small, automatic contributions. Even $10 a week makes a difference
• Pair this with a separate savings account at a bank, credit union, or military-focused institution
  
  
• Learn how withdrawals work ahead of time so you’re not caught off guard in a moment of need
  
  

Use These Tools Wisely

These options are here to support you during tough times. They are not meant to replace your broader financial goals. While it can be reassuring to know you have $1,000 available, treat this as a safety net, not your go-to for everyday expenses.

We still encourage you to build a separate emergency fund. Whether through a traditional savings account or high-yield account, this should be your first line of defense. And if you do need to use one of these new tools, that’s okay. Just make a plan to rebuild what you used so you’re ready the next time life throws a curveball.

Why This Matters for the Military and Veteran Community

Whether you’re fresh out of uniform or a few years into civilian life, these savings tools were created with everyday working families in mind, including yours. Not everyone can put aside a large amount right away, but even $500 saved can give you a sense of control and peace when the unexpected happens.

You’re Not Alone

At Veteran Saves, we believe that anyone can build savings. That includes you, no matter your income, rank, or where you are in your transition. These workplace tools are just one more way to make that goal achievable.

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