The leading tax writers in the House introduced legislation Tuesday that would require that workers are automatically enrolled in retirement investment plans offered by their employers.
Enactment would be a boon to the industry.
The bill, the Securing a Strong Retirement Act, was introduced by House Ways and Means Chairman Richard Neal, a Democrat from Massachusetts, and the top Republican on the tax-writing committee, Rep. Kevin Brady of Texas, to boost the number of workers with retirement accounts.
The bill will “enable more workers to begin saving earlier — and saving more — for their futures,” said Neal.
Brady said that “ensuring Americans have the resources they need for a prosperous retirement is a bipartisan priority.”
Under the legislation, workers would be automatically enrolled in retirement plans, like 401(k)s, that are established after 2021. At least 3% of wages would be contributed to this account, and that amount would increase 1% annually until 10% of a worker’s compensation is invested in the account.
Workers could opt out of the plans. Currently, the exact opposite occurs, as workers must actively choose to save for retirement before any money is withheld from wages, according to the IRS.
Automatic enrollment for retirement plans is currently available, but the federal government does not require them.
The bill’s introduction comes as 40% of retired Americans rely solely on Social Security in retirement, according to a January report by the National Institute of Retirement Security. The report concludes that without a retirement plan beyond Social Security, many retirees would fall into poverty.
The American Securities Association welcomed the bill’s introduction.
“We look forward to partnering with policymakers on both sides of the aisle to help shepherd these needed reforms through the legislative process,” said Chris Iacovella, the group’s CEO.
A spokesperson for the tax-writing committee said the timing for action on the bill is unclear.
