AmeriSave Proposal Announced

August 2005

Just before the August recess, House Democrats introduced their own retirement reform proposal. Their plan, called “AmeriSave,” would provide “middle and working-class families” with a government match of $1 for every $1, up to $1,000, invested in a 401(k) plan or IRA.

The new proposal also hit on another hot-button issue in the retirement services circle: providing financial advice to plan participants. Under the Democratic plan, employers would get an unspecified tax credit if they encourage access to independent, certified financial counselors for employees who are eligible for the new AmeriSaver Match.

In unveiling their AmeriSave program, Democratic leaders said qualified Americans would get the match after they filed a tax return and that the matching funds would be deposited directly into their IRA or retirement plan. The Democrats claimed that nearly 100 million Americans would ultimately be eligible for the new match.

The plan relies on a series of unspecified tax credits to:

• help defray employers’ retirement plan administrative costs
• make it easier for workers to deposit part of their federal tax refund into the retirement plan
• offer employees the opportunity to buy annuities with their retirement assets.

The Democratic plan also encourages automatic enrollment into retirement plans unless the employee chooses not to participate and permits direct deposit of part of a worker’s tax refund into an IRA or retirement savings plan.

The plan was introduced by Representative Nancy Pelosi (D-California), the House Democratic leader, and, among others, Representative Ben Cardin (D-Maryland), who has led Democratic retirement initiatives in recent years.