House lawmakers vote to stop expansion of state-sponsored IRA programs
- GOP House members voted to block federal rules that would simplify states’ ability to provide IRAs to private-sector workers whose employers don’t offer them, reports CNBC. The bill now moves to the Senate.
- The Labor Department issued the regulation in August to give states a blueprint for setting up IRAs. Participants would fund the plans through payroll deductions.
- According to CNBC, the Employee Retirement Income Security Act (ERISA) kept states from setting up IRAs because it was unclear how the states would handle payroll deductions.
More states are taking up laws aimed at protecting workers. Oregon became the first state to offer retirement plans to private-sector workers that don’t have them. Six states will offer similar plans during the next five years, and more might follow.
Half of the nation’s 57 million private-sector employees lack employer-sponsored plans. This latest push reflects a growing interest by many states to step in and provide paid leave and financial wellness programs where private employers may not yet be doing so.
Studies show that many American workers don’t have enough retirement savings, which negatively impacts worker wellness overall. Plans that get workers saving for retirement can help prevent them from suffering financial stress and working past the retirement age. Business leaders like Gerald Patterson of the Principal Financial Group recommend automatically enrolling workers in retirement savings plans of which they can opt out.