Helping Young Americans Save for Retirement

Summary#

This bill changes federal retirement plan rules in two main laws, the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. It lowers the minimum age for required plan participation from 21 to 18. It also keeps an alternative way to become eligible based on work: two consecutive 12-month periods with at least 500 hours of service. The bill adds a rule about plan reporting: for plans that add employees only because of the new age rule, those employees are not counted as participants for a particular independent accountant opinion for 5 years after the first such employee joins. The bill makes related technical changes to several code sections (including 401(k) and 403(b)) and applies to plan years beginning one year after the bill becomes law.

What it means for you#

  • If you are 18 or older, you may become eligible to join an employer retirement plan sooner than under the previous 21-year rule.
  • If you work at least 500 hours in each of two consecutive years, you can also become eligible under the service-based rule.
  • Employers and plan administrators will need to update plan terms and paperwork to reflect the new age and service rules and note the effective date (plan years starting one year after enactment).
  • For some plan reporting and an independent accountant opinion, employees added only because of the new age rule will not be counted as participants until 5 years after the first such employee joins.

Expenses#

No publicly available information.

Proponents' View#

The bill is presented as a way to help young Americans start saving earlier by lowering the age and clarifying participation standards for retirement plans. It updates citations in related tax and retirement code sections to reflect the change.

Opponents' View#

No publicly available information.