Senator Tom Harkin (D-IA) recently unveiled his plan to improve the private retirement system. Senator Harkin’s proposal was the third recent proposal targeting retirement plan savings. President Obama introduced his myRA program during the State of the Union address and Senator Susan Collins (R-ME) and Senator Bill Nelson (D-FL) introduced the Retirement Security Act of 2014 on January 29.
Senator Harkin’s bill, the Universal, Secure, and Adaptable (USA) Retirement Funds Act of 2014 (“USA Retirement Funds”), proposes to offer payroll deductions, particularly to workers who do not have access to employer-provided retirement plans. Under Senator Harkin’s bill, workers would be automatically enrolled in the program at six percent of pay and could contribute up to $10,000 pre-tax per year. Employers also would be given the option to contribute on behalf of employees, up to $5,000 per year per employee. The proposal calls for the USA Retirement Funds to be privately-run retirement plans approved and overseen by the Department of Labor. Unlike many traditional Section 401(k) plans, the USA Retirement Funds would provide for a benefit to be paid out over the course of a participant’s life, with survivor benefits and spousal protections, like a traditional pension plan.
Senator Harkin’s legislation also proposed changes to defined contribution plans including expanding the availability of multiple employer plans and requiring employers to provide employees with annual illustrations of their retirement account balances as lifetime income streams. The Department of Labor also has issued an advance notice of proposed rulemaking on lifetime income illustrations.
You can access the two page summary of Senator Harkin’s bill by clicking here.