Whitehouse, Reed, Cicilline, Magaziner, and U.S. Treasury Highlight New Program to Expand Retirement Savings
Whitehouse’s Proposed Legislation Would Build on Current Efforts, Automatically Enroll Tens of Millions in Retirement Savings Plan
Woonsocket, RI – Senators Sheldon Whitehouse and Jack Reed today joined Congressman David Cicilline, Rhode Island General Treasurer Seth Magaziner, and representatives of the U.S. Department of the Treasury and NeighborWorks Blackstone River Valley to highlight myRA, a new tool that can help thousands of Rhode Islanders begin to save for retirement.
“Despite the success and popularity of Social Security, most people will need additional savings to enjoy financial freedom in their golden years,” said Whitehouse, a member of the Senate Budget Committee. “The myRA program is an important first step in closing the retirement savings gap and has the potential to help many Rhode Islanders begin to save. We need to do more though, and I will continue fighting for my Automatic IRA proposal, which would give tens of millions of Americans the benefit of making automatic payroll-based contributions to IRA accounts.”
“We want to encourage Americans to plan for their future and save for their retirement and myRA offers a new, convenient way for people to save. It is like a starter-account that can be set up from an existing savings or checking account with no start-up costs or fees. And since myRA has no minimum contribution requirement, people can contribute the amount that best fits their budget,” said Senator Reed, a member of the Senate Banking Committee. “We also need to encourage employers to contribute to their employees’ retirement security. And just as important, we need to protect Social Security, the one program that offers stable, guaranteed income security to the elderly, disabled, widows, and children of deceased or disabled workers.”
In Rhode Island, more than 80,000 full-time workers lack access to a retirement savings plan or pension through their employer, according to the Pew Charitable Trusts. While 401(k) programs help millions of Americans build retirement nest eggs, half of the nation’s workforce lacks access to such a payroll-based savings plan.
"It's important that all Rhode Islanders know about the new myRA savings accounts that allow them to save for their retirement in a simple, safe, and affordable way and I'm glad to join Senator Whitehouse in highlighting these new accounts that give people a great way to build retirement security,” said Congressman Cicilline.
To help close this savings gap, the Treasury Department last year launched myRA, a retirement plan open to everyone with no minimum balance requirement, no fees, and no risk of losing money. Savers can elect to make automatic contributions in any amount they choose. Since myRA accounts are Roth IRAs, earnings on deposits are tax-free when savers access their money in retirement. For more information about myRA or to enroll in the program, visit https://myra.gov/.
“As Treasurer, I am committed to strengthening the retirement security and financial well-being of all Rhode Islanders. For the many Rhode Islanders who don’t have access to a retirement savings plan through their employer, myRA offers an affordable way to save for retirement,” Treasurer Magaziner said. “Thank you, Senator Whitehouse and every member of our federal delegation, for championing this valuable new resource to help thousands of Rhode Islanders save for retirement.”
“We designed myRA to remove the barriers to saving for Americans without access to a retirement plan at work,” said myRA Executive Director Richard Ludlow. “With no fees, no risk of losing money and no minimum balance or contribution requirements, myRA gives people an easy way to get started saving for retirement.”
At today’s event, Senator Whitehouse also highlighted legislation he introduced to further increase retirement savings by requiring most employers that do not offer 401(k) plans to set up IRA accounts for their workers. The Automatic IRA Act of 2015 would allow an estimated 30 million Americans to begin saving for retirement.
Under the Automatic IRA Act, an employee would start saving 3 percent of his or her paycheck by default in a Roth IRA account. Employees could change the savings level, convert to a traditional IRA, or opt out at any time. While over 90 percent of workers with automatically enrolled 401(k) accounts save for retirement, few than 10 percent of workers without such plans contribute to IRAs, according to the AARP.
The Automatic IRA Act of 2015 is designed to be simple and inexpensive for employers to implement by offering tax credits to reimburse employers for administrative costs and exempting employers with 10 or fewer employees and start-ups in business for less than two years.
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