Senate Vote This Week Could Reduce Your Chances to Save for Retirement
by Eileen Ambrose, AARP, May 1, 2017
The U.S. Senate is expected to vote this week on overturning a federal guideline designed to encourage states to set up retirement accounts for millions of private-sector employees without a 401(k) or similar plan at work.
The Department of Labor last year issued guidance that would allow cities and states to set up “work and save” plans without worrying they would run afoul of federal pension laws.
The House of Representatives voted this year to get rid of the guidance, and last month the Senate narrowly agreed to roll back the one pertaining to cities. In the next vote, senators will decide whether to scrap the part affecting states.
About 55 million workers do not have access to a retirement plan at work. Research shows that workers with modest incomes are 15 times more likely to save for retirement if they can do so automatically from their paychecks.
So far, seven states have approved setting up work and save plans for their private-sector workers. More than 20 other states as well as a few major cities are considering doing the same. Under these plans, workers could have a portion of their paychecks automatically deposited into a retirement account, typically an IRA. Employers don’t contribute at all. And workers can always opt out, too.
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http://www.aarp.org/politics-society/advocacy/info-2017/aarp-reports-on-work-and-save-vote-fd.html