Four North Carolina lawmakers introduced a bill that would create a state-run retirement program, encouraging private-sector employees without a retirement plan to save via IRAs.
The program, known as the North Carolina Small Business Retirement Savings Program, or North Carolina Work and Save, would offer voluntary enrollment for employers, employees or self-employed individuals who do not currently offer or have a retirement plan.
"An estimated 1.7 million North Carolina working families, including employees, independent contractors, and the self-employed, have no access to an employer-sponsored retirement plan or program or any other easy way to save at work," the bill states. Republican State Reps. Jarrod Lowery, Harry Warren, Jeffrey C. McNeely, and Jon Hardister sponsored the bill, which was introduced in the North Carolina General Assembly Tuesday.
The program's standard package would offer participants a Roth IRA with a target-date investment fund and a contribution rate of 5%, which may increase annually to reach a maximum of 8%. Participants would be allowed to use a traditional IRA and different investments, contribute at a different rate or stop participation altogether, according to the bill.
The program would also allow for portability, including tax-free rollovers or transfers to other accounts within the program or outside the program if such rollovers or transfers are allowed, the bill states.
In order to facilitate the program, the bill would establish the North Carolina Small Business Retirement Savings Board, made up of 12 members, appointed in various ways by the treasurer, governor and state legislature.
So far, 16 states and two cities have established their own retirement programs, according to the Center for Retirement Initiatives at Georgetown University's McCourt School of Public Policy. North Carolina is one of 10 states with legislative proposals or study commissions dedicated to state-run retirement programs, CRI's data show.
However, the bill does not follow the auto-IRA model, which requires employers not offering a retirement plan to sign up. Seven states have already implemented that type of program, according to CRI, including Oregon, California, Illinois and Colorado.