Legislation to change the current non-refundable saver's credit into a refundable, government matching contribution for more workers to contribute to 401(k) plans or IRAs was introduced Thursday by Senate Finance Committee ranking member Ron Wyden, D-Ore., and four other Democratic senators.
The proposed Encouraging Americans to Save Act, EASA, would also restore the federal MyRA program that was ended in July, after several years of modest activity.
The proposed legislation would give up to $500 a year for middle-class workers saving through 401(k) plans or IRAs and enhance the saver's credit by making a full 50% credit available to taxpayers making up to $32,500 a year, with that credit directly contributed into the saver's retirement plan or IRA.
The 50% government match would be available on the first $1,000 of savings per year to an IRA, 401(k) plan, 403(b) tax-deferred annuity, or a 457(b) governmental plan for individuals with income up to $32,500, and couples up to $65,000. The amount of the match would phase out over the next $10,000 of income for individuals and $20,000 for couples, with income limits and contribution caps indexed for inflation.
People saving through state or local government retirement savings programs like OregonSaves would also be eligible for the matching contributions.
Mr. Wyden, joined by Sens. Ben Cardin of Maryland, Bob Casey of Pennsylvania, Amy Klobuchar of Minnesota and Michael Bennet of Colorado, said in a statement that the bill is an effort to "level the playing field" after last year's tax reform, and to help more working families save for retirement.