BOSTON (TheStreet) — The “automatic” IRA may be on the way.
A bill filed by U.S. senators Jeff Bingaman (D-New Mexico) and John Kerry (D-Mass.) would automatically enroll most U.S. workers in individual retirement accounts if their employers don’t sponsor a retirement plan. Half of American workers have no work-based retirement plan, and as many as 42 million Americans would benefit from the bill, Bingaman said in a statement.
The sponsors make their case, in part, by citing the increase in contribution rates commonly credited to automatic enrollment features now used with many 401(k) plans. Automatic IRAs would result in new contributions of about $15 billion a year, the sponsors say.
In the first year after enactment, the provision would apply only to firms with 100 or more employees; in the second year, 50 or more; in the third, 25 or more; and in the fourth, 10 or more. Workers at least 18 years old and employed for at least three months would be automatically enrolled in an IRA.