Senate leader Kevin de León has put forth a bill that would require all California companies, that have at least five employees, to offer their own retirement investment plan or enroll workers in the new California Secure Choice Retirement Savings Program. Though employees could always invest for retirement using an IRA, while getting almost the exact same benefits of the Secure Choice program, many people haven’t taken advantage. As Time Magazine says, ” .. when it comes to putting money away, an employer nudge really matters: 90% of those with workplace plans save for retirement vs. only 20% of those without one.”
What bill does:
Requires that employers with more than 5 employees offer some kind of retirement investment plan to employees.
Offers a way for employees to invest for retirement directly from their paycheck.
Starts employee contributions at between 2% and 5% of their paychecks (the exact details haven’t been hammered out yet).
Automatically enrolls employees (about 6.8 Californians) unless the employee chooses to opt out.
What the bill doesn’t do:
Does not require employers to “match” contributions or provide funds for the retirement of employees.
Does not assume the risk of investing (investors could lose money).
This program does NOT provide assured payouts during retirement (it is NOT a pension plan).
At first the money would be invested in safe, low-yield U.S. Treasury notes. After three years, the funds would likely shift to a diverse portfolio of stocks and bounds. These options would be developed by the Secure Choice Retirement Savings Investment Board. The accounts would likely be Roth IRAs, a mode that allows for tax-free withdrawals upon retirement.
The amount of money deducted from a worker’s payroll would escalate over time, up to 10 percent, but employees would be able to set the amount themselves.
All told, at least 30 states are in various stages of setting up retirement plans—some mandatory for employers and some voluntary—according to the Georgetown University Center for Retirement Initiatives.
At any rate, the Secure Choice Retirement Savings Plan is heading to an employer near you. I’m waiting to hear more about the specific details but this is coming. Do you think it will encourage more employees to invest for retirement? Head over to the Bigger Than Your Block Facebook page and give your opinion.
According to an analysis by the Center on Budget and Policy Priorities, that means a mom working full time at a minimum wage job would receive no help from the credit — because she would be earning only $14,500. Indeed, that mom would lose $1,725 under the new bill, while a family of four earning $150,000 would gain $2,200, according to the center’s analysis.
About 12 million people, including 6 million children, would be pushed further into poverty if the measure became law.
If you’re worried about undocumented people. no worries:
The bill also includes a provision that would bar anyone from receiving the tax break if they do not provide a Social Security number. Many immigrants, including the undocumented, pay their taxes using a tax identification number instead, and all of them would be barred under the bill.
If you think that this bill is bad for America, please contact your House Representativeby entering your zip code here.
Rep. Hansen Clarke (D-MI-13) introduced the Student Loan Forgiveness Act of 2012 (H.R. 4170) on March 8, 2012. If enacted, this legislation will provide student loan forgiveness for federal education loans, allow private student loans to be refinanced into federal direct consolidation loans and cap all federal student loan interest rates at 3.4%.