Details of Public Law 117-328, section 127 , Emergency Savings Accounts Linked to Individual Account Plans

Under RTC sections 17501 and 24601, California automatically conforms to the federal changes made to Part I of Subchapter D of Chapter 1 of Subtitle A of the Internal Revenue Code, which includes IRC section 402A. As a result, the federal provision automatically applies under California law.

California conforms to IRC section 72(t), additional tax on early distributions from qualified plans as applicable for federal purposes for the same taxable year using a rate of 2 ½ percent in lieu of the federal tax rate. (RTC section 17085(c)(1).) Withdrawals from the pension-linked emergency savings account would not be subject to a California early withdrawal tax if they are not subject to the federal additional tax on early distributions.

ERISA Preemption

Additionally, federal ERISA sections specifically preempt state laws relating to certain employee benefit plans in California.