As the Obama Administration moves full steam ahead with healthcare reform, the Administration is also bent on helping more Americans with another pressing issue: saving for retirement.
In early September, the Administration released its list of retirement security initiatives–including expanding on two of Obama’s existing proposals included in his budget, creating automatic IRAs and expanding the Savers Credit. The Administration’s new retirement proposals would expand on automatic enrollment opportunities for 401(k) plans and other retirement vehicles; allow workers to put their tax refunds into U.S. savings bonds; and convert their unused vacation leave into retirement savings. The initiative also includes a plain-English guide issued by The Department of Treasury and the IRS to help workers with retirement plan rollovers when changing jobs.
While industry officials are pretty much in support of the Administration’s retirement proposals, they believe that reaching an agreement on healthcare reform–which will likely come in October or November–will be a priority for the Administration before any of the retirement proposals are taken up on Capitol Hill.
As part of its plan, the Administration is focused on helping small and medium-sized firms to adopt auto enrollment, since it says nearly half of large sized firms have already done so. Since adoption, auto enrollment, the Administration says, has helped boost participation in 401(k) plans from 70% to 90%, and is particularly effective at getting low-income and minority workers to save. Jamie Kalamarides, VP of retirement solutions for Prudential Retirement, says that the Administration’s four regulatory proposals “make it easier for small employers to adopt the best practices of the Pension Protection Act.”