A Retirement Agenda Focused on Auto IRA Enrollments

May 2009

With the new Administration driving its proposal to bring automatic IRA enrollments to retirement savings, and with Congress energized by a spending-heavy stimulus package, the agenda for this Congress is filled with retirement-related proposals.

Legislation creating an automatic IRA for workers excluded from workplace plans has the backing of the Administration, congressional Democrats and a number of congressional Republicans. The proposal would apply to all private employers (except for employers with fewer than 10 employees), and even those with existing plans may be forced to enroll some of their workers who are excluded from qualified plan coverage.

The Administration appears to favor it as the lead retirement issue ahead of 401(k) modifications or fee legislation. It is included in the President’s 2010 budget proposal and has significant bipartisan support. Action on the measure could come within six months and is likely before other retirement issues are finalized by Congress.

The automatic IRA would be in addition to and outside of Social Security – not a new program, just a new twist on existing program. Legislation on this topic considered by the House Ways & Means Committee or the Senate Finance Committee would likely exempt state/local governments from the auto IRA requirement (as prior auto IRA bills have done).

The Administration and some retirement/industry experts are also interested in including a mandated annuity component in all retirement accounts. However, that will likely be part of a larger debate on retirement savings later in this Congress.