I am wondering if this will apply to government employees. Specifically, will the military be required to follow this retirement plan and if so, will it change the type of account they are allowed to have. What about matching? Why require a contribution without a matching incentive? Look forward to hearing more.
Its amazing the amount of attacks that this bill is getting! I’m sure it has nothing to with the fact that it does not benefit the top 10a% right ? How come there is never any push back from the media when the rediculous notion of ” trickle down economics ” is brought up every time the Republicans get into power and they pass the give aways to the top 10% ? Is it because you are as bought and paid for as the Republican party and Joe Manchurian .and kyrsten only my doners get represented Sinema ? That last bit is rhetorical by the way !
Jane,
With the annuity clause, makes you wonder if Congress is looking to address the dwindling Social Security Retirement funds…. Also, what is a defined “employee” does it mean full time 40 hrs. per week, if so, would part time employees be exempt from this? Got to love the way politicians sneak things into these huge bills.
The manner of how this will be brought for approval is unacceptable. I believe such a plan could work and help as a supplement retirement. Only social security will not cut it in retirement. This should not been in the Reconciliation Bill.
Small Business owner here… 32 employees/29 women mostly $ 15-$25/ hour …we currently offer a 3% match and struggle to get folks to save any more. But apparently they all can afford new or leased cars and nights at the bar – literally. I’ve been saving the max for 15 years and it really adds up. At all the points we need to continue to educate and incentivize employees to invest in their futures and this plan may not be perfect but it we could combine it with a national health plan that would be a good safety net for our hourly workers, I’m all in!!
Any savings from driving old used cheap cars will always be lost to repairs and replace. Plus the certainity of lost wages during breakdowns. Perhaps you could implement a dress code requiring particular brand from dollar tree store? Nice clothing is extremely expensive and only useful to impress the boss.
Right you are, Debra, the whole thing sounds good to me. In retirement now, my history of 401-k contributions has served me well. If this wasn’t burried in a reconciliation bill, it would never get done. Certainly everyone in financial services would want to get their interests accommodated. But these interests provide very little service to the workers targeted in this provision. And the targeted workers themselves would likely have very little input into the process.
The max contribution for a 401(k) plan is $19,500, both this year and last. It’s just napkin math, but you seem to be criticizing your top paid employees for not deferring 40% of their pay (The math: $25/hr, full time is $48,000/yr.)
I think if you’d like to see max deferrals, you’re going to have to pay them more, Deb.
You might find that partnering with a Direct Primary Care provider could provide very good primary health care for your employees at a great monthly membership fee. This would provide a wide range of included services, including labs and many meds at wholesale, house calls, broken bones, etc…. Then they could also buy a cheap major medical policy to cover biggies like heart attack, if the employee wants that. Many small employers are using this arrangement to attract better employees.
See Dr. Josh Umbehr’s videos on YT. His practice has been doing this for 12 years or so.
Factory farms here we come. Lay off employees ( to avoid compliance). Besides, with the proposed per mile gas tax, they will not be able to work for the wages currently being paid. We have gas prices just under $5.00/gal. Now add a per mile gas tax, and take away 6% of their wages for mandatory retirement? If you are vegan, your produce is going to skyrocket. I have worked in agriculture and food processing many years.
Why would an employer lay off an employee because of this? These plans do not cost the employer at all. The implementation portion of choosing an investment company to work with and discern the set up in payroll deductions is minimal. There is no kick in from the employer. But there is a payback for all.
While I agree with most of your points, saying that low wage workers would be better off not saving is ridiculous. While I don’t agree with this particular implementation, the fact is, these auto-enrollment systems are probably what’s needed. It’s actually not easy for people to save small amounts of money, especially though payroll. If you’re paycheck to paycheck, you don’t want someone withdrawing money from your bank acct and risking overdraft. You’d rather just not see the money at all. A better system would be simplifying the 401K for small businesses. It’s complex, burdensome, and expensive in it’s current form.
Because its a fed law, this would have to be counted when figuring welfare food stamps and hud and obamacare. This increases the taxpayers contribution to the stockholders but the worker will still require welfare after retirement. You see its just another way to rob the poor to feed the rich. Nothing to do with politics.
I am retired. Social security is not a livable income. You need something additional. If something isn’t done for low wage earners
( those unable to put away money for retirement) there are going to be a lot of people unable to support themselves in retirement. Where will they live? How will they take care of themselves. The U.S. has a way of only thinking about the now. I won’t be here when the work force now retires, but someone needs to be planning for it.
SS was never supposed to be about giving someone a “comfortable retirement”…It was to keep single seniors out of dire poverty, AND to be one leg of a 3-legged stool, 1) SS, personal savings, and 3) a pension.
SS itself was only to provide for a subsistence, like a boarding house w/meals & utilities included, public transport, etc. And it will still do that for most people.
Very few people nearing retirement are making only minimum wage, and certainly should be making enpugh to save, by that time. If there’s any place in the world where you can start poor, and retire well, it’s America.
And I started over at 55, so I know it’s possible.
When I read this article, it brought to mind another way the democrats will “funnel” money into their pockets. Anything this administration has done the bottom line is “how can we legally get more money from the american taxpayers” without permission….same thing they are trying with the banking institutions “anyone’s account who has more than 600 dollars in it the IRS will have access to for taxing”. This is Joe Bidens MO he did it with Social Security, now we pay taxes on money that we already paid taxes on when we worked. And this is his way of stealing money legally to fund his “packages” he is trying to get passed Just saying
It would have been helpful if you would have elaborated on why it could be beneficial for a low wage worker to not save for retirement at all rather than one line and a link to a 40 page academic article. People do not understand that.
Also Americans as a whole do not understand that when people cannot support themselves, the rest of us support them through thousands of programs, subsidies, freebies (look at your energy bill and how much you “donate” to those who can’t pay), etc. Free food, free healthcare, free housing, free daycare, free college, free phones, free internet- all of this exists for a portion of the population.
This law is necessary in the US because too many are irresponsible and do not support themselves and rely on the rest of us. They don’t save a cent and then blame everyone else for that. The one study says people do fine with this “opt in” plan.
Just bc you or I didn’t know this was in the bill, does not mean it was hidden. Biden and many other leaders have long discussed this.
Jane,
I find the tenor of your story very disappointing and your specific comment “some people might be better off without the savings”. One of the greatest growing concerns in the US is the significant % of people at retirement age with virtually no savings who have to work until they die to afford food and housing. Fortunately, wages for the lowest income levels is rising to almost reach poverty levels and encouraging savings will help everyone. The wording in the bill appears to allow employees to “opt out” providing the freedom to forgo the benefits of having the necessary savings in their “retirement years”. This will likely only cause greater suffering and increased government spending to prevent homelessness and starvation, but your point is well taken that this bill will be so onerus on business owners to have to offer a non-contributory savings plan to their employees…
We either pay now or pay later if somebody gets to be 65 without any savings then they’re on social services which is very expensive. I rather have forced savings and not tax or social services later on in life.
Its incredible that people dont comprehend that 90% of low wage workers recieve welfare hud and foodstamps!. All while working full time. This bill only pays off for wallstreet. The workers still have to be subsidized by tax payers.
Yep, the working poor can’t afford to saving when the typical company doesn’t pay a liveable wage… this isn’t rocket science, people. Instead of once again making either the working poor (which is a HUGE percentage of our society) or the government fix everything, how about make the average employer pay a LIVEABLE WAGE so then we’d see workers ABLE to save for retirement.
Dems creating more dependence on government and adding yet another requirement for small business owners.
Left unchecked we will not have to do any thinking for ourselves and have no personal responsibility for our existence.
I am puzzled as to what this program provides. It mandates the opportunity to dump 6 and later 10% of my salary into an IRA but I do not have to. How is this different or better than a self directed IRA? It sounds like the 75 million single IRS filiers making 35000$ a year or less will have even less to pay their bills. I really laugh at your readers comments who obviously have no clue what it means to live in America without working for a fortune 500 company.
Sure, employees could use a self-directed IRA, but you’re also guilty of Fortune 500 thinking if you believe that that is something that many low wage employees find easy to setup and manage. This approach makes it easy. Contributions aren’t mandatory and employees can opt out. But, studies of companies that have automatic enrollment in 401k plans have found that a large percentage of employees stay with the plan rather than opting out.
Demoncrats
(Not a spelling error) They are not for
Baseball, Apple Pie and Mom. They are Socialists. Little by little they are
taking power! It’s time to WAKE-UP!!
Giving money with one hand, sneak-
thieving our rights with the other.
LESS gov.control NOT MORE!!!
Will this affect social security earnings at retirement the way it does teachers, law enforcement, and government employees with cuts over 40 percent of what they are entitled to?
Hyper partisan behavior, negativity, sound bite depth, demonization, etc. have crippled the legislative process. For both parties it’s about gaming the system, not working with it. Reconciliation is a proxy for changing the filibuster. Go ahead and do away with this and this kind of stuff would have to stand on it’s own. The presence of this proposal, good or bad, is a symptom of a dead horse.
Reconciliation is a narrow provision for reconciling small differences between the House and Senate versions of the Constitutionally MANDATORY annual budget. It was NOT a gimmick to squeeze in unappreciated reckless spending and unlimited pork into a huge omnibus bill.
We haven’t had a constitutional, appropriated, passed, and signed budget since 2007 for 2008…The Bush years…
Our profligate Congress has substituted for a real annual budget, CR after CR, ending in HUGE, pork-laden Omnibus Bills, so we middle-class taxpayers foot the bill for obscene spending, with no time to peruse the bills or consent to the spending. And gov’t spending takes more and more of our purchasing power thru taxing and spending, leaving us eventually impoverished.
This bill is a huge benefit and should have been done years ago. It levels things between employees of large companies and employees of small companies. For the last 40 years, large company employees have benefited from larger contribution limits and matching contributions associated with 401ks that small company employees could never get. More regulation? A tax or penalty? So what? Cheap plans are available from big brokerages. Encourages a 10% savings plan? So what? Workers can opt out completely. Encourage and mandate don’t mean the same thing.
These changes are the right thing to do. It should have been done 40 years ago.
Wow. That is some b.s. if I ever heard it but it does not surprise me in the least. I am a paycheck to paycheck worker and I know that even with a 3% reduced tax, that would still put me into debt. There are a lot more people in situations like mine than I think people realize. How are they able to just sneak something like that into a bill without the people (meaning the Americans who ARENT connected to or in the government) being informed??
I am wondering if this will apply to government employees. Specifically, will the military be required to follow this retirement plan and if so, will it change the type of account they are allowed to have. What about matching? Why require a contribution without a matching incentive? Look forward to hearing more.
Its amazing the amount of attacks that this bill is getting! I’m sure it has nothing to with the fact that it does not benefit the top 10a% right ? How come there is never any push back from the media when the rediculous notion of ” trickle down economics ” is brought up every time the Republicans get into power and they pass the give aways to the top 10% ? Is it because you are as bought and paid for as the Republican party and Joe Manchurian .and kyrsten only my doners get represented Sinema ? That last bit is rhetorical by the way !
I wonder what other little goodies our wonderful goverment has tucked in there. Totally discussing as usual
Jane,
With the annuity clause, makes you wonder if Congress is looking to address the dwindling Social Security Retirement funds…. Also, what is a defined “employee” does it mean full time 40 hrs. per week, if so, would part time employees be exempt from this? Got to love the way politicians sneak things into these huge bills.
The manner of how this will be brought for approval is unacceptable. I believe such a plan could work and help as a supplement retirement. Only social security will not cut it in retirement. This should not been in the Reconciliation Bill.
Social Security bailout.
Small Business owner here… 32 employees/29 women mostly $ 15-$25/ hour …we currently offer a 3% match and struggle to get folks to save any more. But apparently they all can afford new or leased cars and nights at the bar – literally. I’ve been saving the max for 15 years and it really adds up. At all the points we need to continue to educate and incentivize employees to invest in their futures and this plan may not be perfect but it we could combine it with a national health plan that would be a good safety net for our hourly workers, I’m all in!!
Any savings from driving old used cheap cars will always be lost to repairs and replace. Plus the certainity of lost wages during breakdowns. Perhaps you could implement a dress code requiring particular brand from dollar tree store? Nice clothing is extremely expensive and only useful to impress the boss.
Comment stricken.
Right you are, Debra, the whole thing sounds good to me. In retirement now, my history of 401-k contributions has served me well. If this wasn’t burried in a reconciliation bill, it would never get done. Certainly everyone in financial services would want to get their interests accommodated. But these interests provide very little service to the workers targeted in this provision. And the targeted workers themselves would likely have very little input into the process.
The max contribution for a 401(k) plan is $19,500, both this year and last. It’s just napkin math, but you seem to be criticizing your top paid employees for not deferring 40% of their pay (The math: $25/hr, full time is $48,000/yr.)
I think if you’d like to see max deferrals, you’re going to have to pay them more, Deb.
You might find that partnering with a Direct Primary Care provider could provide very good primary health care for your employees at a great monthly membership fee. This would provide a wide range of included services, including labs and many meds at wholesale, house calls, broken bones, etc…. Then they could also buy a cheap major medical policy to cover biggies like heart attack, if the employee wants that. Many small employers are using this arrangement to attract better employees.
See Dr. Josh Umbehr’s videos on YT. His practice has been doing this for 12 years or so.
Factory farms here we come. Lay off employees ( to avoid compliance). Besides, with the proposed per mile gas tax, they will not be able to work for the wages currently being paid. We have gas prices just under $5.00/gal. Now add a per mile gas tax, and take away 6% of their wages for mandatory retirement? If you are vegan, your produce is going to skyrocket. I have worked in agriculture and food processing many years.
Why would an employer lay off an employee because of this? These plans do not cost the employer at all. The implementation portion of choosing an investment company to work with and discern the set up in payroll deductions is minimal. There is no kick in from the employer. But there is a payback for all.
While I agree with most of your points, saying that low wage workers would be better off not saving is ridiculous. While I don’t agree with this particular implementation, the fact is, these auto-enrollment systems are probably what’s needed. It’s actually not easy for people to save small amounts of money, especially though payroll. If you’re paycheck to paycheck, you don’t want someone withdrawing money from your bank acct and risking overdraft. You’d rather just not see the money at all. A better system would be simplifying the 401K for small businesses. It’s complex, burdensome, and expensive in it’s current form.
Because its a fed law, this would have to be counted when figuring welfare food stamps and hud and obamacare. This increases the taxpayers contribution to the stockholders but the worker will still require welfare after retirement. You see its just another way to rob the poor to feed the rich. Nothing to do with politics.
I am retired. Social security is not a livable income. You need something additional. If something isn’t done for low wage earners
( those unable to put away money for retirement) there are going to be a lot of people unable to support themselves in retirement. Where will they live? How will they take care of themselves. The U.S. has a way of only thinking about the now. I won’t be here when the work force now retires, but someone needs to be planning for it.
SS was never supposed to be about giving someone a “comfortable retirement”…It was to keep single seniors out of dire poverty, AND to be one leg of a 3-legged stool, 1) SS, personal savings, and 3) a pension.
SS itself was only to provide for a subsistence, like a boarding house w/meals & utilities included, public transport, etc. And it will still do that for most people.
Very few people nearing retirement are making only minimum wage, and certainly should be making enpugh to save, by that time. If there’s any place in the world where you can start poor, and retire well, it’s America.
And I started over at 55, so I know it’s possible.
Do you have a savings plan …Yes….but the stupid low wage workers would be better off without one…. let them eat 🍰…..
When I read this article, it brought to mind another way the democrats will “funnel” money into their pockets. Anything this administration has done the bottom line is “how can we legally get more money from the american taxpayers” without permission….same thing they are trying with the banking institutions “anyone’s account who has more than 600 dollars in it the IRS will have access to for taxing”. This is Joe Bidens MO he did it with Social Security, now we pay taxes on money that we already paid taxes on when we worked. And this is his way of stealing money legally to fund his “packages” he is trying to get passed Just saying
Comment stricken.
It would have been helpful if you would have elaborated on why it could be beneficial for a low wage worker to not save for retirement at all rather than one line and a link to a 40 page academic article. People do not understand that.
Also Americans as a whole do not understand that when people cannot support themselves, the rest of us support them through thousands of programs, subsidies, freebies (look at your energy bill and how much you “donate” to those who can’t pay), etc. Free food, free healthcare, free housing, free daycare, free college, free phones, free internet- all of this exists for a portion of the population.
This law is necessary in the US because too many are irresponsible and do not support themselves and rely on the rest of us. They don’t save a cent and then blame everyone else for that. The one study says people do fine with this “opt in” plan.
Just bc you or I didn’t know this was in the bill, does not mean it was hidden. Biden and many other leaders have long discussed this.
I think the key thing here is that you can opt out, and you can adjust the contribution. Anyone who wants a privatized solution to SS, this is it.
Jane,
I find the tenor of your story very disappointing and your specific comment “some people might be better off without the savings”. One of the greatest growing concerns in the US is the significant % of people at retirement age with virtually no savings who have to work until they die to afford food and housing. Fortunately, wages for the lowest income levels is rising to almost reach poverty levels and encouraging savings will help everyone. The wording in the bill appears to allow employees to “opt out” providing the freedom to forgo the benefits of having the necessary savings in their “retirement years”. This will likely only cause greater suffering and increased government spending to prevent homelessness and starvation, but your point is well taken that this bill will be so onerus on business owners to have to offer a non-contributory savings plan to their employees…
We either pay now or pay later if somebody gets to be 65 without any savings then they’re on social services which is very expensive. I rather have forced savings and not tax or social services later on in life.
Its incredible that people dont comprehend that 90% of low wage workers recieve welfare hud and foodstamps!. All while working full time. This bill only pays off for wallstreet. The workers still have to be subsidized by tax payers.
Yep, the working poor can’t afford to saving when the typical company doesn’t pay a liveable wage… this isn’t rocket science, people. Instead of once again making either the working poor (which is a HUGE percentage of our society) or the government fix everything, how about make the average employer pay a LIVEABLE WAGE so then we’d see workers ABLE to save for retirement.
You have obviously never run a small business. Gimmee, gimmee. You’ll die poor, with that attitude.
Dems creating more dependence on government and adding yet another requirement for small business owners.
Left unchecked we will not have to do any thinking for ourselves and have no personal responsibility for our existence.
I am puzzled as to what this program provides. It mandates the opportunity to dump 6 and later 10% of my salary into an IRA but I do not have to. How is this different or better than a self directed IRA? It sounds like the 75 million single IRS filiers making 35000$ a year or less will have even less to pay their bills. I really laugh at your readers comments who obviously have no clue what it means to live in America without working for a fortune 500 company.
Sure, employees could use a self-directed IRA, but you’re also guilty of Fortune 500 thinking if you believe that that is something that many low wage employees find easy to setup and manage. This approach makes it easy. Contributions aren’t mandatory and employees can opt out. But, studies of companies that have automatic enrollment in 401k plans have found that a large percentage of employees stay with the plan rather than opting out.
Demoncrats
(Not a spelling error) They are not for
Baseball, Apple Pie and Mom. They are Socialists. Little by little they are
taking power! It’s time to WAKE-UP!!
Giving money with one hand, sneak-
thieving our rights with the other.
LESS gov.control NOT MORE!!!
Will this affect social security earnings at retirement the way it does teachers, law enforcement, and government employees with cuts over 40 percent of what they are entitled to?
If the contributions are to Roth IRAs, as the article mentioned, they won’t reduce wages subject to FICA taxes and so won’t affect benefits.
Hyper partisan behavior, negativity, sound bite depth, demonization, etc. have crippled the legislative process. For both parties it’s about gaming the system, not working with it. Reconciliation is a proxy for changing the filibuster. Go ahead and do away with this and this kind of stuff would have to stand on it’s own. The presence of this proposal, good or bad, is a symptom of a dead horse.
Reconciliation is a narrow provision for reconciling small differences between the House and Senate versions of the Constitutionally MANDATORY annual budget. It was NOT a gimmick to squeeze in unappreciated reckless spending and unlimited pork into a huge omnibus bill.
We haven’t had a constitutional, appropriated, passed, and signed budget since 2007 for 2008…The Bush years…
Our profligate Congress has substituted for a real annual budget, CR after CR, ending in HUGE, pork-laden Omnibus Bills, so we middle-class taxpayers foot the bill for obscene spending, with no time to peruse the bills or consent to the spending. And gov’t spending takes more and more of our purchasing power thru taxing and spending, leaving us eventually impoverished.
This bill is a huge benefit and should have been done years ago. It levels things between employees of large companies and employees of small companies. For the last 40 years, large company employees have benefited from larger contribution limits and matching contributions associated with 401ks that small company employees could never get. More regulation? A tax or penalty? So what? Cheap plans are available from big brokerages. Encourages a 10% savings plan? So what? Workers can opt out completely. Encourage and mandate don’t mean the same thing.
These changes are the right thing to do. It should have been done 40 years ago.
Wow. That is some b.s. if I ever heard it but it does not surprise me in the least. I am a paycheck to paycheck worker and I know that even with a 3% reduced tax, that would still put me into debt. There are a lot more people in situations like mine than I think people realize. How are they able to just sneak something like that into a bill without the people (meaning the Americans who ARENT connected to or in the government) being informed??
It’s their SOP.