Retirement Planning: Automatic IRAs to Become Law?

1:32 pm Uncategorized

New Mexico Senator Jeff Bingaman has introduced a bill that would require employers with 10 or more employees that don’t offer 401(k) plans to automatically enroll their employees into an IRA.

The Automatic IRA Act would not force workers to participate, but would require them to proactively opt out if they did not want to make contributions, which as proposed would be three percent of their wages.  The contribution would be funneled to a Roth IRA unless the participant chose a traditional IRA.  Employers could elect to choose a provider for their employee IRA accounts, or leave it up to individual employees to choose their own provider.

Congressman Richard Neal, D-Mass., introduced a similar bill in the House last week.  The Automatic IRA proposal was developed by scholars from the Heritage Foundation and the Brookings Institution, and is supported by the AARP.  The non-partisan Retirement Security Project says the proposal could raise net national savings by nearly $8 billion annually.

A lack of planning has spurred Congress into action, and for many Americans it is no doubt a good idea to put a plan in place that at the very least makes them think before they choose not to plan for retirement.

However, a much better strategy is to plan for your own retirement yourself, and your first step is consulting with a knowledgeable California retirement planning attorney to customize a plan that fits your life now and what you want it to be in the future.

Help is available to you by contacting your Southern California financial planning experts today.

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