Employers that dont provide a retirement plan would be required to enroll their employees in a direct-deposit IRA account under a proposal in President Barack Obamas fiscal year 2010 federal budget outline released today.
Under the proposal, pledged during Mr. Obamas campaign for president, employees would be able to opt out of the automatic-enrollment IRA savings program if they dont want to participate. The budget outline indicates that the savers credit and automatic IRA proposal combined would cost $13.9 billion from 2010 through 2014. The program, which would require legislation, would fall under the Department of Labor.
Mr. Obamas budget outline said automatic IRAs, together with Social Security benefits, could dramatically increase both the number of Americans who save for retirement and the overall amount of personal savings for individuals.
Experts estimate that this program will increase the savings participation rate for low- and middle-income workers from its current 15% level to around 80%, the presidents budget outline said.
The budget outline also includes a proposal to expand the existing savers credit program to provide a 50% match on the first $1,000 of retirement savings made by families earning less than $65,000 a year. The credit would be fully refundable to ensure that savings incentives are fair to all workers, the outline said.