Retirement Requirements

 

 

 

 

For a number of years, policymakers have been focused on finding ways to help Americans become better financially prepared for retirement. Studies have found having access to payroll-deduction retirement savings plans at work makes it 15 times more likely Americans will save for the future. Consequently, policymakers have focused their attention on smaller companies. About 36 percent of Americans work for companies with fewer than 100 employees, and many of these businesses do not offer retirement plans.

Last July, Oregon launched OregonSaves, the state’s auto-IRA program. Companies that don’t have workplace retirement plans are required to facilitate the program by:

• Providing information to set up Roth IRA accounts for employees
• Making payroll deductions to the Roth accounts
• Delivering updated employee information California, Connecticut, Illinois, Maryland, and Massachusetts are working on similar programs.

Some business owners have embraced the auto-IRA opportunity, while others object to having the government involved. A Pew Charitable Trusts survey of 1,600 small and mid-sized business owners found 51 percent would prefer to sponsor their own retirement plans rather than participate in a state-run plan.

Many employers who participated in focus groups were not aware low-cost retirement plan options are available in the marketplace. Pew researchers noted:

“Most [small and medium-sized employers] did not have a full understanding of how 401(k) plans work, and few were familiar with plans or incentives designed for small businesses, such as the Simplified Employee Pension (SEP) Plan, the Savings Incentive Match Plan for Employees (SIMPLE), or the small employer tax credit for retirement plan startup costs.”

 

Sources:
https://www.aarp.org/ppi/info-2017/Access-to-Workplace-Retirement-Plans-by-Race-and-Ethnicity.html
https://www.bls.gov/web/cewbd/table_f.txt
http://www.pewtrusts.org/~/media/assets/2016/01/retirement_savings_report_jan16.pdf?la=en (Page 9)
https://employer.oregonsaves.com/home.html
https://www.segalco.com/media/3139/medicaid-savings-infographic.pdf
http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/01/small-business-views-on-retirement-savings-plans
http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/09/business-owners-perspectives-on-workplace-retirement-plans-and-state-proposals-to-boost-savings
https://blog.ted.com/the-quest-for-love-and-compassion-shah-rukh-khan-speaks-at-ted2017/

Sawston Wealth Management, LLC, is a Registered Investment Adviser with the State of Washington. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

The above material was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named advisor.