Bicameral, Bipartisan Retirement Bill Introduced

The current focus for this Congress may be on SECURE 2.0, but legislators from both parties and both houses of Congress have introduced a new retirement savings bill.

The Retirement Savings for Americans Act was introduced by U.S. Senators John Hickenlooper (D-CO) and Thom Tillis (R-NC), and Representatives Terri Sewell (D-AL) and Lloyd Smucker (R-PA). According to a press release, the bill would establish a new program that gives eligible workers access to portable, tax-advantaged retirement savings accounts. It would also offer federal matching contributions for low- and middle-income workers, with the match beginning to phase out at median income.

The bill contains the following provisions:

• Eligibility and Auto Enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be eligible for an account, and they would be automatically enrolled at 3% of their income. They could choose to increase or decrease their withholding or opt out entirely at any time. Independent workers (including gig workers) would also be eligible.
• Federal Contribution: Low- and moderate-income workers would be eligible for a 1% automatic contribution (as long as they remain employed) and up to a 4% matching contribution via a refundable federal tax credit. This would begin to phase out at median income.
• Portability: Accounts would remain attached to workers throughout their lifetimes, and workers would be able to stop and start contributions at will.
• Private Assets: The accounts would be the property of the worker and the assets could be passed down to future generations to help them build wealth and financial security.
• Investment Options: Much like the current Thrift Savings Plan, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker’s estimated retirement date, or index funds made of stocks and bonds.

“This is not going to impact the legislative process this year but is really a placeholder for discussion in the new Congress,” noted Brian Graff, CEO of the American Retirement Association. “We have already expressed serious reservations about the proposal with the sponsors and will continue to engage them when the new Congress convenes next year.”

Full text of the bill is available here.