Retirement Savings for Americans

Summary#

This bill would create the American Worker Retirement Fund and a system to let many workers save for retirement. It sets up a new federal investment board, an executive director, and an advisory council to run the Fund. Workers who do not have an existing workplace retirement plan would be "qualifying workers." Participating employers must enroll qualifying workers unless the worker opts out. Enrolled workers are automatically enrolled at a default 3% contribution of pay, with rules to change or stop contributions.

Accounts are individual and nonforfeitable when made. Participant contributions are treated like Roth contributions (not deductible). The bill creates a Government Match Tax Credit (new Internal Revenue Code section 25F) that adds money to a participant's account. That credit generally matches 100% of the first 3% of income contributed, 50% for contributions between 3% and 5%, and 0% above 5%, and also includes a 1% credit of gross income. The Treasury would deposit the credit amounts into participants' accounts and may make advance payments timed with contributions. If a contribution supported by a credit does not stay in the Fund for at least six months, part of the credit can be forfeited and returned to the Treasury.

The Board must offer specific investment options (government securities fund, fixed-income fund, common stock index, small-cap index, international index, and life-cycle target-date funds). Participants may choose how their account is invested, at least twice a year, and a default life-cycle fund applies if no choice is made. Participants and the Board may not exercise voting rights attached to securities owned by the Fund. Administrative expenses may be paid from the Fund's net earnings.

The bill allows former participants to take distributions as an annuity, single payment, or equal periodic payments, and it permits loans, voluntary withdrawals at age 59 1/2 or for hardship (subject to rules), and involuntary distributions if a participant's income exceeds a specified tax-code threshold. The bill includes rules on spousal protections and survivor rights similar to those that apply to the federal Thrift Savings Plan. The Board and fiduciaries have duties, prohibited transaction rules, bonding and audit requirements, and potential liability and penalties for breaches.

The bill amends the Internal Revenue Code to add the Government Match Tax Credit (section 25F) and sets that amendment to apply to taxable years beginning after December 31, 2024.

What it means for you#

  • If you are a worker without access to a workplace retirement plan, you could be automatically enrolled in the American Worker Retirement Fund unless you opt out.
  • Your contributions would be treated like Roth contributions (not deductible now, but withdrawals follow Roth rules). You could receive a matching tax credit deposited into your account based on your contributions and income.
  • You could choose from several investment options and change your choices at least twice a year. If you do nothing, your money would go into an age-appropriate life-cycle fund.
  • You could borrow from your account under rules set by the Board, and you could take withdrawals after age 59 1/2 or for hardship, subject to safeguards and spousal protections.

Expenses#

  • The bill does not include an overall federal cost estimate or budgetary total in the text. No publicly available information.
  • Administrative expenses for running the Fund are to be paid from the Fund's net earnings, not by annual appropriations. The bill allows the Fund to buy insurance for fiduciaries and to pay board and staff costs from the Fund.
  • The Treasury would deposit Government Match Tax Credit amounts into participant accounts; the bill describes the credit mechanics but does not give a total cost estimate.

Proponents' View#

  • The bill states its purpose is to establish the American Worker Retirement Plan and "improve the financial security of working Americans by facilitating the accumulation of wealth." Supporters, as reflected in the bill text, aim to expand retirement saving access through automatic enrollment, matched credits, and a professionally managed fund.

Opponents' View#

No publicly available information.