Federal Proposals for Mandatory Programs to Close the Coverage Gap
Recent federal proposals to close the coverage gap have focused on a broad solution, like a national auto-IRA program, but have failed to gain any significant traction.
The President’s budget included a national auto-IRA plan, conceptually similar to those that several states have adopted.
Employers with more than 10 workers and no retirement plan would be required to automatically enroll workers at a 3-percent contribution rate with workers allowed to opt out.
|No action by Congress.
|USA Retirement Funds Act (S.1979)
(Sponsor: Senator Tom Harkin, D-IA)
Employers with more than 10 workers and no plan would be required to either begin offering an auto-enrollment plan with a life-time income option or participate in the USA program. The USA program would automatically enroll workers at a 6-percent
contribution rate, with workers allowed to opt out. Employers would be allowed to make a matching contribution. Self-employed workers would also be allowed to participate.
Contributions would be invested in a commingled portfolio, so the individual would not make any investment decisions.
Payments at retirement would be in the form of an annuity.
|Referred to Committee on Health, Education, Labor, and Pensions. No action.
|SAVE UP Act (H.R.5731)
(Sponsor: Representative Joseph Crowley, D-NY)
Employers with 10 or more workers and no plan would be required to auto-enroll workers in a retirement account at a 3-percent contribution rate (eventually increasing to 5 percent), with workers allowed to opt out.
Employers would be required to contribute 50 cents per hour to this account, with this amount increasing with wage growth.
|Referred to Committee on Ways and Means. No action.
|Automatic Retirement Plan Act of 2017 (H.R.4523)
(Sponsor: Representative Richard Neal, D-MA)
Employers in operation for at least three years with more than 10 workers would be required to establish a 401(k) or 403(b) retirement plan. Workers would be automatically enrolled at a default contribution rate of 6 percent, with contributions automatically escalating by 1 percentage point per year up to 10 percent. Workers would be allowed to opt out.
Committee on Ways and Means, and
Education and the Workforce. No action.
|Automatic IRA Act of 2019 (S.2370)
(Sponsor: Senator Sheldon Whitehouse, D-RI)
This bill is broadly similar to other auto-IRA proposals and the state initiatives. It would require employers with more than 10 workers and without a plan to automatically enroll their workers at a contribution rate of 3 percent (or at a rate determined by the Secretary of the Treasury between 2 percent and 6 percent), with workers allowed to opt out.
|Referred to Committee on Finance. No action.
|Automatic IRA provision (H.R. 5376: Build Back Better Act)
(Sponsor: John A. Yarmuth, D-KY)
This bill would require employers with more than 5 workers and without a plan to automatically enroll their workers in an IRA at an initial contribution rate of 3 percent, with auto-escalation to 6 percent. Workers would be allowed to opt out. The bill would also allow for a Saver’s Credit of up to $500 to be deposited into a participant’s account.
Committee on Ways and Means. No further action.