Automatic IRA Act: Mandatory Workplace Retirement Savings Enrollment.
This law establishes a system where employees are automatically enrolled in Individual Retirement Accounts (IRAs) through payroll deductions unless they actively choose to opt out. The goal is to boost retirement savings, particularly for workers without existing employer-sponsored plans. Employers, with limited exceptions, must facilitate these automatic savings arrangements or face financial penalties.
Key points
Automatic Enrollment: Employees are defaulted into a retirement savings plan (IRA) using payroll deductions (opt-out system).
Contribution Escalation: Initial contribution starts at 6% of pay and automatically increases up to 10% over several years.
Employer Penalties: Companies failing to implement or facilitate these arrangements may face daily financial penalties ($10 per day per employee).
Small Business Credit: Eligible small employers can receive a $500 annual tax credit for the first three years of facilitating the program.
Default Roth IRA: Unless the employee makes an affirmative election, the IRA account will be treated as a designated Roth IRA.
Status:
Introduced
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