The stick is bigger than the carrot.
Federal legislation was recently introduced that would create a new automatic IRA program for employees of companies that dont already offer another retirement savings plan. Tucked away in the fine print of the bill is a provision requiring employers that refuse to introduce such a program to pay an excise tax of $100 per employee per year. The relatively diminutive carrot, available only to companies with fewer than 100 employees, would give the employers a maximum tax credit of $250 a year for two years for their trouble in setting up the automatic deductions.
Despite those numbers, the Retirement Security Project, a Washington-based organization that promotes retirement savings and backs the new IRA plan, says that if enacted, the legislation introduced in the House May 3 by Reps. Richard Neal, D-Mass., and Philip English, R-Pa., and in the Senate April 18 by Sens. Jeff Bingaman, D-N.M., and Gordon Smith, R-Ore. could generate new savings of $8 billion a year.
We are encouraged by the strong bipartisan interest and sponsorship, particularly on the committees of jurisdiction, said Mark Iwry, a Retirement Security Project principal.