Picking up on a theme he’s visited many times in the past — the creation of a national IRA (individual retirement account) — President Obama on Monday directed Thomas Perez, secretary of the Department of Labor (DOL), to draft a regulation enabling states to create such investment vehicles for employees not covered by company retirement options.
The president said the regulation should “provide a clear path forward for the states to create retirement savings programs.”
At least two states already have created programs for employees at firms not offering retirement investment plans. California has the Secure Choice Retirement Savings Trust that will automatically enroll all state-based employees in the plan once it’s implemented (which won’t be before 2016 at the earliest). Similarly, Illinois has the Secure Choice Savings Program payroll-deduction IRA.
The Illinois bill requires all businesses in existence for at least two years with 25 or more employees to automatically enroll their employees in the program unless they offer another retirement option to their workers. The start of the program is at least two years off, however.
Other states, including Connecticut, Colorado, Arizona, Maine, Indiana and several more are in various stages of studying and implementing similar programs.
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