A bipartisan group of lawmakers have reintroduced a bill in the House and Senate that would give workers without an employer-sponsored retirement plan access to a federal program similar to the Thrift Savings Plan.
Sen. John Hickenlooper, D-Colo.; Sen. Thom Tillis, R-N.C.; Rep. Terri Sewell, D-Ala.; and Rep. Lloyd Smucker, R-Pa., reintroduced the Retirement Savings for Americans Act during National Retirement Security Week to raise awareness about the retirement savings crisis, according to an Oct. 20 news release.
"Americans who work hard their entire lives deserve to retire with dignity," Hickenlooper said in the news release. "This bill helps low-income workers enjoy a secure retirement and fulfill their American dream.''
The bill, originally introduced in December, would "establish a new program that gives eligible workers access to portable, tax-advantaged retirement savings accounts," according to the news release.
The program is modeled after the $804 billion Thrift Savings Plan, which serves as the retirement system for 6.7 million federal employees and members of the uniformed services.
Both full- and part-time workers would be eligible for the new program and automatically enrolled at a contribution rate of 3%, with the option to increase or decrease their withholding or opt out at any time. Low- and moderate-income workers would be eligible for an automatic contribution of 1%, and they would be eligible to receive up to a 4% matching contribution in the form of a refundable tax credit, according to a fact sheet on the bill.
"Much like the current TSP, participants would be given a menu of simple, low-fee investment options to choose from, including lifecycle funds tied to a worker's estimated retirement date, or index funds made of stocks and bonds," the fact sheet states.
Some key changes from December's legislation include clarifying language to ensure that businesses enrolling independent contractors, who are eligible for the new plan, will not have that factored into the employee-employer test and updated language to clarify that low- and middle-income Americans will be eligible for the tax credit, according to the fact sheet.