Theres no surprise retirement readiness is a top concern among small employers, with their employees are most at risk a conversation that took center stage when President Barack Obama unveiled the MyRA initiative for employers last year.
But experts still dont have high hopes the current Congress will accomplish any tax or retirement legislation in the near future, and say they believe that state-level plans for automatic IRA programs may provide more immediate solutions than any action at the federal level.
Speaking recently at the Employee Benefit Research Institutes 76th policy forum, Derek Dorn, vice president, associate general counsel at TIAA-CREF, says Washington is not a city where retirement-related legislation is getting churned out on a daily basis.
We will be waiting for tax reform legislation for a while, he said, but the good news for the retirement community is we are [now] a part of the conversation.
Instead, Dorn says employers should look toward state legislatures to fill in the gaps in federal policy.
Auto IRA programs are incredibly important proposals, added Judy Miller, chief of actuarial issues and director of retirement policy at the American Retirement Association, noting that at least 30 state legislatures have some sort of proposal on the way.
These are going to be what will push the federal government into action, she said. Having four to five states with some patchwork plans will be the catalyst for uniformity, she added.
Bill Hoagland, senior vice president at the Bipartisan Policy Center, agreed on the necessity for auto IRA programs, but voiced caution in the approach state and federal governments take with regard to voluntary and mandated plans.
I think we have to look for something like this, but have to get away from mandates, he said.
In addition to auto IRA programs, Miller also noted the benefit of the starter 401(k) programs a component of Sen. Orrin Hatchs (R-Utah) SAFE Retirement Act that allows employees to save up to $8,000 per year, more than in an IRA, but wont involve the administrative burden or expense of a historical 401(k) plan.
The starter 401(k) is good because its a plan that employers can grow with, Miller added. Once an employer grows to the point it can afford to make higher contributions, a starter 401(k) could be easily amended to a full-blown 401(k) program.
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