The new bill is targeted directly at the millions of working class Americans, such as those in the rural, gig economy or employed by small businesses, who don’t have access to a workplace retirement plan,” according to a statement from Senator John Hickenlooper (D-CO) and Senator Thom Tillis (R-NC).

The American Retirement Association does acknowledge “there is a need to address the retirement plan coverage gap in the private-sector workforce,” however, the new bill would incentivize “employers to close their company 401(k) plan (in many cases with more generous employer contributions to rank and file employees)” to utilize the new American Worker Retirement Fund.

This sentiment is also shared by Morningstar Center for Retirement & Policy Studies, which explained. "Employers would be less likely to offer a plan because the proposal's federal match tax credit would effectively subsidize some portion of the employer's contributions. This impacts retirement-income adequacy because savings rates in defined contribution plans are a lot higher than the bill's 3% default rate. This is also true for lower-income workers.”

In addition, said the ARA, SECURE 2.0 has “provisions specifically catered to encouraging small employers and gig workers to adopt retirement plans. These provisions created new small business friendly retirement plan designs, like pooled employer plans (PEPs) and the Starter K plan, as well as provisions that provide robust tax credits to small businesses for the adoption of new plans that may cover the entire cost to administer a plan.”

The RCAA is modeled after the successful federal Thrift Savings Plan (TSP) and would offer federal matching contributions for low- and middle-income workers, with the match beginning to phase out at median income. The bill contains these provisions:

Auto-enrollment: Full- and part-time workers who lack access to an employer-sponsored retirement plan would be eligible for an account, and they would be automatically enrolled at 3% of their income. Participants could choose to increase or decrease their withholding or opt out entirely at any time. Independent workers (including gig workers) also would be eligible.

Federal contribution: Low- and moderate-income workers would be eligible for a 1% automatic contribution (as long as they remain employed) and up to a 4% matching contribution via a refundable federal tax credit. This would begin to phase out at median income.

Portability: Accounts would remain attached to workers throughout their lifetimes.

Private Assets: The accounts would be the property of the worker, and the assets could be passed down to future generations to help them build wealth.

Investment options: Much like the TSP, participants would be given a menu of simple, low-fee investment options to choose from, including target date funds and index funds.

Related: Newly terminated federal workers can keep retirement funds in their $968B Thrift Savings Plan

One strong supporter of the new RSAA bill is President Trump’s newly-appointed Director of the White House National Economic Council, Kevin Hassett, who served during the first two years of the Trump Administration. Hassett co-wrote the Economic Innovation Group’s white paper, Inclusive Wealth-Building Initiative, which was the basis for the RSAA legislation. His white paper and the RSAA bill are supported by the Economic Innovation Group, a billionaire-backed think tank advocating for radical reform of the retirement system.