Harkin introduces “USA Retirement Funds” bill

Sen. Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has introduced legislation, “The Universal, Secure, and Adaptable (USA) Retirement Funds Bill” (S. 1979), designed to provide employees without a retirement plan access to “a quality employer provided plan.”

“Our country is facing a growing retirement crisis, and it’s only going to get worse unless we take action,” Harkin said. “The USA Retirement Funds Act offers a common-sense solution to the retirement crisis by giving the 75 million people without a retirement plan at the workplace the opportunity to earn a safe, portable, and secure pension benefit for life.”

“The USA Retirement Funds Act is particularly good for small business owners,” Harkin added.” It would allow them to offer more competitive benefits to their employees while at the same time relieving them of the burden of managing a pension plan themselves.”

USA Retirement Funds would be privately-run retirement plans approved and overseen by the Labor Department. The assets held by each USA Retirement Fund would be pooled and professionally managed by trustees.

Contributions

Under the bill, employers with more than 10 employees would be required to offer a retirement plan with automatic enrollment and a lifetime income option or automatically enroll their employees in a “USA Retirement Fund.” Employees would be automatically enrolled at a rate of 6% per year, but could choose to raise, lower, or stop their contributions.

Individuals could contribute up to $10,000 per year pre-tax and employers would also be able to contribute up to $5,000 per year for each employee, provided the contribution was made uniformly. Low-income individuals would be eligible for a refundable saver’s credit.

Lifetime income

Individuals participating in a USA Retirement Fund would earn a benefit paid out over the course of their retirement, with survivor benefits and spousal protections, like a traditional pension. The amount of a person’s monthly benefit would be based on the total amount of contributions made by, or on behalf of, the participant and investment performance over time.
Portability

Participants would be permitted to change USA Retirement Funds every year and would be allowed to roll their 401(k) or IRA balances into a fund. Additionally, a person under 60 with a small account balance would be able to roll that account balance over to another retirement plan. A person over 60 who has sufficient retirement income outside the fund or is facing a substantial hardship could elect to take a one-time, lump-sum withdrawal of the greater of $10,000 or 50% of his or her benefit.

SOURCE: Sen. Harkin news release.

Visit our News Library to read more news stories.