President Barack Obama is currently seeking to improve and expand upon the current retirement plans in the United States in order to give more Americans access to retirement. He’s attempting to push a bill through congress than could be the solution to more than 30 million Americans’ retirement plans falling through, according to the White House.
As it currently stands, his bill will change legislation for the 2017 budget he’s going to submit to Congress in February. The changes include altering funds for small businesses, requiring more plans within companies, and bringing down expenses for company retirement plans.
The plan to offer tax credits to small businesses so that they can automatically enroll employees in a 401(k) or similar retirement plan could be revolutionary for small businesses that don’t generally have the means to provide retirement plans. Currently there are 28 million registered small businesses in the United States, which make up 55 percent of all jobs in the nation. A plan like this could mean big things for local businesses getting back in the market. This will entice small businesses to include more retirement plans, but not all businesses will be able to afford it.
Another part of the plan involves requiring companies who currently offer retirement plans to offer them to more of their employees, particularly those who are long-term, part-time workers who put in more than 500 hours of work per year and work for the company for at least three years. On the employee end, such a perk would be extremely beneficial. Most companies don’t offer retirement plans for employees who work less than part time, and this would be an excellent way to reward those employees who have stuck it out with a single company. However, this makes it very challenging for businesses who must now come up with the funds and resources to develop such a retirement plan.
Finally, the bill is pushing to make expenses cheaper by making it easier for companies to pool their retirement plan resources into a multi-employer plan. This will involve working with banks and other financial resources in order to develop such a plan that can meet a wide variety of needs.
Aside from the benefits for businesses of getting tax credits, it can also help on the consumer end. It would cut taxes for millions of Americans because they won’t have to pay the taxes that go into their retirement savings. This is especially beneficial for those who are self-employed or independent contractors, which is a growing market in today’s job force.
All of these changes to the budget are a part of an economic security agenda that Obama has been pushing for several months. In his final State of the Union address, he shared his plans, which included expansion of benefits for those who are unemployed. He told Congress the following.
“For Americans short of retirement, basic benefits should be just as mobile as everything else is today. Even if he’s going from job to job, he should still be able to save for retirement and take his savings with him.”
Even though the Congress is currently controlled by the Republicans as of now, Obama is fairly optimistic that the bill will go through. “These items shouldn’t be particularly controversial,” Labor Secretary Tom Perez told reporters Monday. “In fact, a lot of these ideas enjoy bipartisan support and have bipartisan roots.”
Pushes for changes in the retirement plans of today have been going on for years. It seems that it’s only waiting for just the right push to get it through to legislation. A few states have already approved retirement plans that are similar to what Obama is suggesting, so the concept won’t be too foreign. The Obama administration is encouraging these efforts and is hoping to use them as grounds to continue pushing improvements and expansions on nationwide policy for retirement plans.
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