U.S. Sen. Thom Tillis (R-NC) and U.S. Rep. Lloyd Smucker (R-PA) proposed a bipartisan, bicameral bill that would reward work, build wealth, and boost economic security for millions of American workers by enabling them to save for retirement.
The Retirement Savings for Americans Act of 2023, S. 3102, which Sen. Tillis cosponsored on Oct. 19 alongside bill sponsor U.S. Rep. John Hickenlooper (D-CO), would establish the American Worker Retirement Plan to improve the financial security of working Americans by facilitating the accumulation of wealth, according to the text of the bill.
“Roughly 40 million Americans lack access to an employer-sponsored retirement plan, which represents a significant roadblock to achieving financial security for their retirement,” Sen. Tillis said. “The Retirement Savings for Americans Act tackles this problem by establishing a pathway for savings for Americans lacking retirement options.”
Rep. Smucker on Oct. 25 sponsored the same-named H.R. 6065 with four original cosponsors, including U.S. Reps. Carol Miller (R-WV), Adrian Smith (R-NE), and Terri Sewell (D-AL) in the U.S. House.
“Hard-working Americans deserve a modern pathway to find financial security in their retirement. I am proud to join in this bipartisan and bicameral effort to advance the Retirement Savings for Americans Act, to help millions of Americans save for their retirements,” said Rep. Smucker. “I will continue to advocate for policies which help hard workers live their American Dream, including a well-earned and financially stable retirement.”
The 75-page bill is targeted directly at the millions of working class Americans, such as those in the rural, gig economy or employed by small businesses, who don’t have access to a workplace retirement plan, according to a bill summary provided by the lawmakers.
If enacted, the bill would establish a new program allowing eligible workers access to portable, tax-advantaged retirement savings accounts, and would enable the federal government to match contributions for low- and middle-income workers, with the match beginning to phase out at median income, the summary says.
The proposed bill would allow full- and part-time workers who lack access to an employer-sponsored retirement plan to be eligible for an account and automatically enrolled at 3 percent of their income. Workers could increase or decrease their withholding or opt-out at any time, according to the summary.
Additionally, the measure would make low- and moderate-income workers eligible for a 1 percent automatic contribution (as long as they remain employed) and up to a 4 percent matching contribution via a refundable federal tax credit, says the summary, noting that this provision would begin to phase out at median income.
Among other provisions, the bill also would provide participants with low-fee investment options, including lifecycle funds tied to a worker’s estimated retirement date or index funds made of stocks and bonds, the summary says.
“Too many hard-working Americans are not able to prepare financially for retirement. Over half of working employees lack access to the tax-advantaged retirement benefits that many higher-income earners take advantage of to save,” Rep. Smucker said. “Additionally, as the workforce continues to innovate and more Americans become categorized as gig workers, the reliance on traditional employer-sponsored plans causes too many workers to slip through the cracks.”
The measure has garnered support from numerous entities, including DoorDash, Uber, Charles Schwab, the Economic Innovation Group, the International Franchise Association, the Flex Association, Goldman Sachs 10,000 Small Businesses Voices, and the Small Business & Entrepreneurship Council, among many others.