In the News

Most workers would automatically enroll in their employer’s 401(k), 403(b) or SIMPLE IRA retirement plan as soon as they become eligible under bipartisan reforms authored in part by the U.S. Rep. Richard E. Neal, D-Springfield.

That’s a switch from most plans, which are now opt-in.

“We do opt out,” Neal said last week.

The automatic enrollment would begin at 3% of the worker’s salary. That would gradually increase until the worker is contributing 10% of gross pay. This would encourage more people to plan for retirement, Neal said.

“That is a real problem for younger savers,” he said. “They want the money up front.”

The bill recently passed unanimously out of the powerful House Committee on Ways and Means Committee, chaired by Neal. Last week, the House passed it by a 415-5 vote.

“If you got 415 votes in the House of Representatives,” Neal said, “that provides great impetus and momentum going over to the Senate.”

The Senate hosted hearings on some of the bill’s provisions last week.

“Retirement savings has been one of my legacy issues,” Neal said. “People are going to be encouraged to save significantly more money.”

Two years ago, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed and made into law, allowing 4 million more Americans to save for retirement through their employers.

“That’s a reflection of the fact that people are working longer,” Neal said.

The bill enhances the startup credit, making it easier for small businesses to sponsor a retirement plan. It calls for penalty-free withdrawals from retirement plans for individuals in cases of domestic abuse.

And it indexes the “catch-up” contribution limit for IRAs. That allows savers to catch up if they are unable to contribute to their retirement plans for a period of time, like if they are paying a child’s college costs in their 50s, Neal said.

One of the goals of the bill is to encourage credit unions, life insurance companies and community bankers to help set up retirement plans, Neal said.

He thanked the ranking Republican on the committee, Keven Brady of California, for his support of the bill. Brady is leaving the House at the end of this term. Neal said the list of supporters includes AARP, financial services firm Edward Jones and the American Red Cross.

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