Automatic IRA Act Seeks to Boost Retirement Savings
Bills aimed at helping Americans save more for retirement by automatically deducting three percent of their wages and depositing it in an IRA were recently introduced in Congress by New Mexico Senator Jeff Bingaman and Massachusetts Congressman Richard Neal.
The Automatic IRA Act would require employers with 10 or more employees to participate if they do not already offer a 401 (k) or other retirement savings plan to employees. According to reports on the legislation, employees would not be required to participate but would have to opt out of the program. The default account would be a Roth IRA, but employees could choose to contribute instead to a traditional IRA. The employer would be allowed to choose a provider for all employees, or allow each employee to choose his or her own IRA provider.
The default investment for the Automatic IRA will be a new type of Treasury Retirement Bond specially created for use with the Automatic IRA, the R-Bond. Individuals can override this choice at any time.
If passed, the Automatic IRA Act would provide employers with a $250 tax credit for each of the first two years of operation to offset implementation administrative costs. Employers that are exempt from the Act include businesses in operation less than two years, government and church employers.
To learn more about IRA planning, please consult the Jacksonville law firm of Wood, Atter & Wolf, P.A..
