Feds want to boost retirement savings: What it’ll mean for you
February 3, 2010 by Christian SchappelPosted in: Employment law, Money, Pay and benefits, Special Report - Benefits
The feds may soon require you to give employees the ability to enroll in individual direct-deposit retirement savings accounts.
At a recent meeting of the Middle Class Task Force, President Barack Obama and Vice President Joe Biden (the chairman of the task force) laid out their plan to help middle-class individuals and their families save more for retirement.
Here are the details of the task force’s plan, as reported by Investment News:
- Employers who don’t offer retirement plans would have to enroll their employees in direct-deposit IRAs automatically — but employees would be given the option to opt-out
- New tax credits would help pay employer administrative costs, and
- The smallest companies will be exempt.
No timetable has been set for when the proposed plan could take effect. We’ll keep you posted.
Do you think forcing employers to set up direct-deposit IRAs is a good idea? Let us know in the Comments Box below.
Tags: Barack Obama, Direct-deposit IRAs, Investment News, IRAs, Joe Biden, Middle Class Task Force, obama, retirement savings accounts
February 4th, 2010 at 2:14 pm
What I believe, is that the Government should have given the working class a separate individualized retirement savings account each, INSTEAD of FICA general savings to be spent hap-hazardly on non-planned expenses, thereby creating the shortfalls that we may be facing in the near future.
Forcing people to save money in addition to FICA deductions only helps people fall short of their present day needs and could ultimately help them into a bankruptcy or worse, an early grave. Then they would have saved for naught!
February 4th, 2010 at 2:32 pm
I think it is a great idea! Americans are legging behing the developed world when it comes to savings, let alone retirement savings. In the end we, the working class ends up taking care of retired people after retirement. Everyone should think ahead so that they don’t always look up to the government to take care of them when they are out of the workforce. This would cut down the medicare cost which which is a significant chuck ‘o change.
February 4th, 2010 at 2:46 pm
I will be forcing my 21 year old son to enroll in our 401k…one day he will thank me. No one living pay check to paycheck wants to give up even a dollar for savings for retirement but just like my son…they would be grateful one day. I can ill afford to put 3% in my 401k (I’m a single mom) but I do it. I would waste that much in what some people spend in coffee for the week. And it really isn’t that much…should be more but it’s better than nothing.
February 4th, 2010 at 3:02 pm
It sounds like a good idea to me. But the implimentation by the government may complicate things for both employer and employee. It would be nice for the employee to be able to pick his own administrator for his plan and let the employer direct deposit into the plan and possibly do a match. But the devil will be in the details.
February 4th, 2010 at 3:36 pm
I believe the government should just take us all by the hand. We all need to be led to the correct water, right? Every effort by this administration to make us a socialist country should be met with serious resistance. It is painfully obvious that this administration thinks we can’t manage our own lives. I save 3% to my 401K, I choose where to invest that money, and I am ultimately responsible for my own retirement. Stop this tax and spend freight train, let me keep more of the money I earn by taxing me less and spending less on social programs. A campaign to promote personal responsibility? I’d vote for that!
February 4th, 2010 at 3:39 pm
It’s obvious that alot of people can’t manage their lives because of the mess this country is in. I wish someone would have taken me by the hand years ago. I don’t have any where near enough in my 401k to retire and I’m getting close to that age. My fault but would have been nice to have some direction.
February 4th, 2010 at 3:45 pm
With everyting going up in costs, except wages, I do not believe most “middle class folk” will be able to afford another deduction from their payroll checks. If they are lucky enough to be earning a payroll check.
February 4th, 2010 at 4:16 pm
We offer a 403b, and I take personal responsibility of going to individuals and getting them to attend confences with our 403b representatives. I find that as much as we advertise the program; the face to face contact with an explanation of the importance of savings is what gets them there. I do it, because I am nearing retirement and I wish I had saved more. Why didn’t I? I didn’t understand the importance of doing it. I really wish someone had taken me by the hand.
February 4th, 2010 at 4:20 pm
For Cindy: Glad you’re a sheep….
For Joyce: Exactly. Get the govt out of our lives. If there are those that are too naive to save/fend for themselves, well I’m sorry.
February 4th, 2010 at 4:42 pm
The Government should not get involved in people’s finances, but then again the Governemnt should not be involved in half the things they are in these days. I think a bigger issue is the concept of “retirement age.” It has become a mindset in this country that when you reach a certain age you have a right to retire. I believe you should save, but if you don’t then you don’t retire. Is that really that bad? We have a number of people here that are between 65, and 80. Most of them could retire , but don’t want to. In fact, one had retired, but ended up coming back because retirement got boring after a while. I know of other people just like that.
February 4th, 2010 at 5:05 pm
Every young person now a days, still do not think they are going to get old, just like we did when we were their age. But we have all survived just fine without the governments help (some better than others). Then why all of a sudden does this administration think they have to SAVE US from ourselves. They just need to preside over the United States and not RULE the USA!!! We have the right to choose our own path in life, not to have it chosen for us.
February 4th, 2010 at 5:18 pm
I agree with Joyce…too much government control. Look at our country’s budget – are we in the black or red? Do we want the government teaching us how to handle our money? Personal financial planning classes are a great way to go.
February 4th, 2010 at 5:49 pm
WHY DOSEN’T THE GOVERNMENT START BY INCREASING THE CONTRIBUTION LIMITS FOR 401(K)’S?
February 4th, 2010 at 9:55 pm
I am one of those folks that would like to see really limited government. With that said, our government system for health care, retirement is set up to benefit those folks who work for companies that can afford 401k plans and group health insurance. It is not set up to make it easy for smaller companies to provide these kinds benefits to their employees. So for those companies that can’t afford 401k’s this is a great option and employees hopefully receive the same tax benefits as those who are provided 401k’s.
February 5th, 2010 at 8:39 am
Agreed Obama wants to get too involved in our personal lives, but why doesn’t The Middle Class Task Force the take some of that stimulus monies and create a mandatory curriculum for high school students addressing the necessity …instead of making more laws for employers to conform to. You know help us fix the problem, not add to it!
February 5th, 2010 at 8:42 am
To Tootsie:
Wonderful idea! I’ve been saying this for years. High school does not prepare out children for real life situations…barely the academics in my opinion. I think this type of education would make a BIG difference. My kids school doesn’t even teach them about preparing for the job search.
February 5th, 2010 at 10:02 am
First, the government should increase the amount individuals can contribute to their individual IRA’s, 401’sK’s, etc, and allow all individual IRA’s to be deducted on their income taxes. Second, this would increase the savings rate in the USA. Also, the government would need to increase the FDIC insurance rate at all savings institutions throughout the US. Taking action is important, but forcing employers is a tough call. Small businesses can only afford so much, and many employees are barely making minimum wage. Using FICA is a great idea, even if part of FICA is put into the individual accounts. The retirement changes need to start somewhere.
February 5th, 2010 at 11:53 am
I’m with Chris and Joyce, and wish more people would speak the truth! The current administration needs to back off and quit spending our tax dollars on unwanted “tax-borrow-and-spend” policies. Taxpayers should fight to stop our tax dollars from being used to pay for another stimulus package, which will undoubtedly be stuffed with more wasteful pork-barrel projects. To those of us who are part of the baby boomer generation with hopes of retiring in a few years–I sure hope you have something put away because Social Security is completely bankrupt–there is nothing left in the treasury but dusty IOU’s because it’s been spent on other things that we tax-payers didn’t have a say. By the way, the FICA we’re paying today is supposed to be used to pay the Social Security benefits of people who retired many years ago–you will never see that money spent on you (if you under 65).
February 5th, 2010 at 1:32 pm
I agree with Cindy and Tootsie, education is key. I have believed for most of my adult life that middle and high schools should teach practical living arts such as how to budget, balance a check book, interview for a job, save for the future etc. A lot of people, including myself, do not or did not receive that kind of education at home. Let’s stop spending trillions on wars we cannot win and funnel some of those dollars towards educating our citizens to be better citizens and better able to help themselves.
February 5th, 2010 at 2:58 pm
If the government really wants to help people, how about education during high school that teaches everyone basic life planning such as budgeting, saving for retirement, how to do your own taxes, etc. I think that would give everyone a lot more that forcing people to do something they still don’t understand. Plus, no one responds well to being forced to do something. I know that my employees will opt out of something like this just because they feel treatened by being told they have to do something.
February 5th, 2010 at 3:02 pm
All of us who want less goverment control need to be doing things to get our voices heard. Email congressmen, or do whatever you can to get the word out that we don’t want this. It seems that the ones who want socialism and goverment to control everything are the only ones speaking out. Obvisouly they are the majority who voted.
February 5th, 2010 at 3:13 pm
to Jenny:
My employees love auto enrollment. I’m assuming this will work the same way…can opt out if you want. So who is being forced?
February 8th, 2010 at 8:57 am
Although I would love to have a few dollars in a retirement account by the time I pay my bills and feed my family I’m BROKE. I say to the government give me the money I have given you for the last twenty years and Ill put that money into a retirement account. That would be a good start. Who are they to give me advice? The last I checked the government was broke. If I were as broke as they are I would be living on the street. How fair is that? I’m not saying the suggestion to save money is not sound advice all I’m saying is how can I save money if the government is already taking more then I can afford?
February 9th, 2010 at 2:14 pm
[...] increase is meant to work with Obama’s new direct-deposit Individual Retirement Account (IRA) proposal to help employees be more financially secure when they [...]
February 10th, 2010 at 9:47 am
I agree that there should be more education in middle and high school. There wasn’t when I was in school, but I learned about budgeting and saving from my parents.
March 4th, 2010 at 11:48 am
I agree! It would be nice, my employer offers a Simple IRA, but doesn’t send my contribution in for 2 or 3 months later, meaning he gets to use my money free. Direct Deposit would be awesome, but of course we fall in the “small company” category. Plus the employer match hasn’t been sent in since June last year!! 10 months and counting!
March 9th, 2010 at 7:44 pm
All auto-enrollment has done for my payroll staff is create a lot of extra work in automatically enrolling employess, sending out the opt-out notices, and processing and unenrolling the 90%+ opt out notices received back from the employees. The increase in number of participants has been minimal compared to the extra work it has caused. Legislating savings; WOW what will the liberals come up with next?