The Vermont House of Representatives has passed legislation that would create VTSaves, bringing the state one step closer to becoming the latest to establish a state-run retirement program to provide coverage to private-sector employees whose employers do not.
The state Senate had passed S.135 on April 6; the House followed suit on May 9.
Among the provisions of the legislation are the following.
Accounts. VTSaves would be an auto-IRA program, through which payroll deductions would be contributed to an IRA. Contributions would be made to a Roth IRA; however, the state Treasurer would be authorized to add an option for all participants to elect to contribute to a traditional IRA instead of a Roth IRA. Participants would be able to roll over the funds in their accounts into other IRAs or other retirement accounts.
Employers. Employers that do not already have a workplace retirement plan would be required to sign up, and their employees automatically enrolled in a Roth IRA with automatic payroll deductions.
Employees. Employees would be automatically enrolled, but would have the ability to opt out of the program. They also would have the ability to adjust their contribution rates.
Contributions. The initial contribution rate would be 5% of an employee’s salary or wages; the Treasurer could require an annual increase of each active participant’s contribution rate, by not less than 1%, but not more than 8%, of salary or wages each year.
The legislation now goes to Gov. Phil Scott (R); he is expected to sign it into law.