The federal Automatic IRA (Individual Retirement Arrangements) Act of 2024, currently in the House Ways and Means Committee, would require small businesses to provide retirement plans to employees. 

The revamped act, HR 7293, was introduced by Ways and Means Committee ranking member Rep. Rich Neal (D-MA) Feb. 7. The bill requires businesses with 10 or more employees to provide IRA options to workers. A former attempt by Democrats to pass similar regulations would have applied to businesses with five or more employees, according to Investment News.

The article also says 15 states already have laws that require IRA programs. 

“Automatic IRAs are simple, effective, and proven tools to help more workers save for secure retirements,” Neal said in a press release. “Across the country, many state automatic IRAs are demonstrating that automatic IRAs not only work in increasing savings rates but also help close racial, gender, and income savings gaps, and it’s past time for the federal government to expand this success to all Americans. The Ways and Means Committee has established a recent precedent of bipartisan, meaningful retirement policy wins for the people, and to meaningfully build on our progress, I am committed to advancing the Automatic IRA Act of 2024 into law.”

The American Association of Retired Persons (AARP), American Council of Life Insurers (ACLI), American Retirement Association(ARA), State Street Advisors (SSA), Teachers Insurance and Annuity Association of America (TIAA), and Women’s Institute for Secure Retirement (WISER) have supported the bill, a Neal press release says. 

“The AARP applauds Congressman Neal’s continued efforts to bring the prospect of a more financially secure future to millions of Americans,” said Nancy LeaMond, AARP Executive Vice President and Chief Advocacy and Engagement Officer, in a release. “We look forward to continuing our work together to find solutions to the retirement crisis facing America. The Automatic IRA Act of 2024 will help better ensure more Americans can achieve a secure and dignified retirement.” 

According to a summary of the act, the proposed legislation requires all automatic contribution plans or arrangements (except for automatic IRAs) to: 

• • Default at a minimum of 6% (can be higher, but only up to 10% the first year and 15% thereafter). 
  • Automatically increase at 1% per year up to 10%, i.e., 6% to 7% to 8% to 9% to 10%. Treasury will prescribe administrative rules to facilitate the implementation of automatic escalation. 

The bill summary says that the exact level of default contributions is not left to the employer’s discretion for automatic IRAs. The set level for default contributions is as follows: 

• • Year one – 6%
  • Year two – 7% 
  • Year three – 8%
  • Year four – 9% 
  • All subsequent years – 10%

The Society of Collision Repair Specialists (SCRS) offers a Multiple Employer Plan (MEP). 

The plans offer benefits that a SIMPLE IRA does not, such as:

• • The ability for employees to make Roth 401K contributions;
  • Increased savings limits for both business owners and employees;
  • A wide range of employer match options, including the ability to add a vesting schedule; and
  • Automatic enrollment for employees, which provides owners with a $500 tax credit.

SCRS’ MEP was launched on April 1, 2019, to “help participating businesses and employees save expenses relevant to their 401k balances, reduce administrative responsibilities for companies, and provide fiduciary support.”

It also allows businesses to customize their plan features, offers administrative support to help businesses with the transition, and requires one audit for the entire plan, saving companies that do their audits both money and time.

Visit www.scrs.com/401k to contact the advisory team and complete a basic request for more information.

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