16 state legislatures have adopted programs focusing on retirement savings.
This focuses on workers with employers not offering a 401(k) plan. (Photo: CNBC)
Retirement Saving Programs to Improve Retirement Savings
This focuses on workers with employers not offering a 401(k) plan. According to a published post by CNBC, there are some programs already implementing this and some are in the planning stages.
Businesses are not required to participate in these programs. Most require companies to offer their own 401(k) or managed the automatic enrolment of their workers in IRAs through the state’s so-called auto-IRA program. Workers are also given the chance to opt-out of these programs.
This focuses on workers with employers not offering a 401(k) plan. (Photo: CNBC)
$1 Billion Savings This Year for Retirement Program Participants
The Executive Director of Georgetown University’s Center for Retirement Initiatives said that there are two new state programs enacted each year which they expect to continue in 2023. As more states use these programs, assets will soon exceed $1 billion, and more than 1 million savings accounts are expected in 2023.
Even though there are some differences, they generally involve auto-enrolling workers in a Roth IRA through a payroll deduction starting around 3% or 5%, unless the worker opts out. This will not cost the employers any money as investment companies manage the accounts.
It is good to note that contributions to Roth accounts are tax-free. Traditional IRAs are taxable and are considered an alternate in some states.
