Industry groups tout new federal auto-IRA House bill for employers without a 401(k) plan
In a letter to House Ranking Member Richard Neal, over 20 companies and industry trade associations expressed support for the Automatic IRA Act of 2024, which will provide more access to retirement plans for small businesses.
More than 20 companies and trade groups expressed support for the Automatic IRA Act of 2024 in a letter sent this week to the bill’s sponsor, Rep. Richard Neal, D-Mass.
“We believe in the strength and vitality of the private retirement plan system but recognize that more needs to be done to help more of America’s workers achieve retirement security,” the letter said to Rep. Neal. “Your bill represents a meaningful step forward in strengthening and enhancing our nation’s retirement security. It will increase retirement plan coverage and the benefits of those individuals covered by a plan, including offering them the option to take a distribution in the form of a guaranteed, protected lifetime income solution.”
The legislation would require employees to automatically be enrolled in an IRA or other automatic contribution plan or arrangement, such as a 401(k). The legislation would create a new tax credit of $500 per year for three years for employers of up to 100 employees that offer either a state or national automatic IRA, in addition to other existing tax credits.
“Automatic IRAs are simple, effective and proven tools to help more workers save for secure retirements,” said Neal, Ranking Member of the House Ways and Means Committee. “Across the country, many state automatic IRAs are demonstrating that automatic IRAs not only work in increasing savings rates but also help close racial, gender and income savings gaps, and it’s past time for the federal government to expand this success to all Americans.”
The proposed legislation would give employers and workers greater flexibility, the letter added.
“Your bill will establish a national framework that would ensure broader coverage and enhanced benefits for small business workers while at the same time preserving the possibility of private sector innovation and flexibility to adjust to the changing needs of tomorrow’s workers,” it said.
“The bill will also provide more opportunities for employers to utilize new tools provided to them in the SECURE Act and the SECURE 2.0 Act, such as pooled employer plans, starter 401(k) plans and enhanced tax credits to expand opportunities for more workers to save during their working years.”
Related: House introduces a new federal auto-IRA bill for employers without a 401(k) plan
The American Retirement Association, Insured Retirement Institute, Voya Financial, Prudential and Transamerica are among the prominent organizations that signed the letter.