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March 25, 2022 at 01:45 PM
Two Democrats in Congress have recently introduced legislation aimed at increasing employee participation in employer-sponsored retirement plans.
The Auto Reenroll Act of 2022 would create a requirement that workers reevaluate their decision to opt out of an auto-enrollment retirement plan every three years. The proposed law would amend ERISA and IRC safe harbor rules that apply in the retirement plan context to encourage businesses to adopt these plans in the future.
We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about the newly proposed Auto Reenroll Act.
Below is a summary of the debate that ensued between the two professors.
Their Votes:
Bloink
Byrnes
Their Reasons:
Bloink: Automatic enrollment in company-sponsored retirement plans has been shown to increase the contribution rates among employees who might not otherwise save for retirement. Of course, those plans also give employees the right to opt out of participation at the outset.
This new bill would automatically reenroll the employee in the plan every three years after the employee chooses to opt out of the plan — furthering the goal of auto enrollment in the first place and encouraging overall workplace retirement plan participation.
Byrnes: This legislation wouldn’t do anything but create additional paperwork and headaches for Americans who have already made their retirement savings choices. Employers have the ability to provide employees with information about their retirement savings options and the benefits of those options, including an employer match.
That should be entirely sufficient to allow employees to make their own decisions without creating a new piece of legislation that simply creates more administrative burdens for the employers who offer these retirement plans.
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