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Debate: Should Congress Create Portable Retirement Accounts for All Americans?

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Democrats in the House and Senate have introduced a bill, the Portable Retirement and Investment Account (PRIA) Act, that would automatically establish a retirement account for every American at birth, providing a portable retirement and investment account (PRIA) at the same time the person is issued a Social Security number. 

The accounts would be managed by an independent board appointed by the Treasury, the Pension Benefit Guaranty Corp. and other agencies. Account holders would have the option of choosing their own investment options within the PRIA.

Employers would also be entitled to contribute to the account holder’s PRIA if (1) the employer does not offer a retirement plan option, (2) the individual account holder works through mobile platforms or (3) the individual is not entitled to participate in the employer’s retirement account.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about the PRIA proposal.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

Bloink

Byrnes

Their Reasons:

Bloink: The current retirement savings account system isn’t working for all taxpayers. Americans are more likely than ever to change jobs frequently and work independently in the modern “gig” economy. Traditional 401(k)s simply don’t cut it for these taxpayers — and we shouldn’t expect to return to the “old” workplace model anytime soon. It’s time that our retirement savings system evolved along with our evolving workspaces. 

Byrnes: Every American has the opportunity to open an IRA even if their employer doesn’t offer a retirement savings option. Creating an entirely new form of retirement accounts would add to a system that’s already much too complicated for many Americans to navigate. While every individual would automatically be eligible for these accounts at birth, eligibility would change over time — creating yet another complication that could actually act as a barrier to savings. 

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Bloink: We need a system where each and every American is assigned a retirement savings account automatically. It makes administrative sense to create these accounts based on every individual’s Social Security number. This proposal wouldn’t eliminate any of the existing retirement options — Americans could continue to fund a 401(k) or IRA if that’s their choice. It merely creates an account that would travel with each American for life, giving part-time and gig economy workers the flexibility they need. We shouldn’t let administrative complexities get in the way of developing this type of powerful savings tool.

Byrnes: The PRIA is no different from an IRA. An IRA travels with the individual, not the employer. We should focus on simplifying the existing rules to make it easier for ordinary Americans to save — not make the system even more complicated and force employers to navigate yet another set of retirement account rules.

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Bloink: Many employers would have the same option of contributing to PRIA accounts rather than establishing 401(k)s — an option that doesn’t currently exist with the IRA model. Employers often want to offer a retirement benefit to retain and keep employees, but aren’t interested in the heavy administrative burden that these accounts can create. With the PRIA, that excuse would be eliminated — allowing the employer to contribute a valuable retirement benefit even without the burden of administering an employer-sponsored plan.

Byrnes: I’m all for encouraging retirement savings. We don’t need this new PRIA concept to incentivize savings. I’m not entirely sure anyone has thought the administrative aspects of this plan through. The proposal calls for a nine-person board to manage the retirement accounts of every single U.S. citizen? We’re years away from implementing anything like this and we need a solution today. We should focus more on our existing retirement plan options and ways to increase savings today.

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