A growing number of states are picking up on the idea of a Retirement Security Account to provide access to a low-cost, well-managed, scalable and portable retirement plan for all workers.
At the state leve, an RSA can use a the existing retirement or investment infrastructure to pool the investments of thousands of workers at small- and medium-sized businesses. The result? Extremely low fees; professional fund management; and a portable retirement plan that helps smaller businesses offer more competitive benefits.
RSAs aren’t intended to replace current retirement plans. They are designed for individuals and businesses without workplace-based retirement investing. It’s a supplement to Social Security (which provides a defined benefit pension for older Americans, but alone is barely enough to keep many retirees out of poverty).
Here's what happening with RSAs in states across the country:
Assembly Bill 125 would establish the California Employee Savings Program, to offer IRAs for individuals and a SIMPLE IRA for businesses.
Senate Bill 1 and General Assembly Bill 971 would require the state comptroller to establish a tax-qualified defined contribution retirement program to provide retirement investment plans, including, but not limited to, those created under Section 401 of the Internal Revenue Code, to self-employed individuals, small employers and tax-exempt organizations.
House Bill 78 would allow the Treasurer’s office to create and administer a defined contribution plan for the state’s not-for-profit employees. Not-for-profit employers could opt into the retirement plan and contributions to the plan could be made by the employer, the employees, or by both.
House Bill 1669 would establish the Pennsylvania Voluntary Accounts program.
The Center for American Progress produced “Rewarding Hard Work: Giving Pennsylvania Families A Shot at Middle Class” which discusses the importance of expanding defined contribution pension systems for private sector workers and shoring up the defined benefit program for state workers. | Read more
House Resolution 5696 and Senate Resolution 453 would create a legislative commission to study and plan Retirement Security Accounts, including a defined contribution plan that allows tax-deferred payroll deductions and is portable between jobs. The legislation intends to plan a system with both workplace based individual retirement accounts open to all workers, and a deferred compensation 401(k) or SIMPLE IRA-type program open to all employers.
House Bill 2026 creates a program for qualified small employers with 50 employees or less to utilize a plan under one of several sections of the Internal Revenue Service code.
Concurrent Resolution 6 requests the Joint Committee on Government and Finance study the benefits, costs and feasibility of establishing a West Virginia Universal Voluntary Accounts Program. The Senate and House adopted the resolution in March 2008.
Several individuals and organizations are champions for expanding retirement savings. Mark Iwry, Brookings Institution Non‐resident Fellow, and Dean Baker, Co‐director for the Center for Economic and Policy Research, have provided support to states across the country. Both Mr. Iwry and Mr. Baker have been instrumental in researching and promoting RSAs.
The New America Foundation and their Vice President, Michael Calabrese have also been advocating for a national RSA policy initiative.
With half of all working Americans not covered by a retirement plan at their workplace, many states across the country are taking an interest in Universal Retirement Savings Accounts (RSAs).Full Report »
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