Today, the Rhode Island state legislature passed a new state-based auto-IRA program, making it the 17th auto-IRA program in the nation and the 20th state program overall.
The bipartisan bill establishing the Rhode Island Secure Choice Retirement Savings Program passed 35-1 in the Senate and 65-8 in the House, and now goes to the governor to sign it into law.
The program, to be administered by the general treasurer, is designed to mimic the structure of the “Secure Choice” savings programs already implemented or approved in 16 states.
Under the new legislation, Rhode Island private-sector employers with five or more employees would be required to offer a retirement plan to their employees. The mandate can be satisfied with any type of retirement plan, such as a 401(k).
The bill also includes provisions for the state-facilitated IRA-based retirement program, allowing participating employers to comply without having to establish and manage their own plans.
Employee participation is voluntary, and contributions are made to an individual retirement account through payroll deductions. Savings plans are portable, so if an employee switches jobs, the plan will follow them.
The American Retirement Association recently expressed its support for Rhode Island’s program, sending a letter to state lawmakers stating it believes the bill strikes the proper balance to close the retirement plan coverage gap in the private sector workforce to the greatest extent possible while imposing the minimum possible burden on Rhode Island’s employers.
“Nearly all small businesses that do not have a retirement plan want to offer one for their employees,” Nathan Glassey, ARA’s Director of Federal and State Legislative Affairs, wrote in the letter. “After conducting a national survey of small business owners, Pew Charitable Trusts found that 86% of small and mid-sized employers without plans—employers with between 5 and 250 employees—support the concept of a payroll deduction retirement plan with automatic enrollment. Among small employers without plans, 51% said they would start their own plan rather than enroll workers in the state-facilitated program.”
As of today, every state in New England with the exception of New Hampshire has adopted a state savings program.
As of April 2024, state programs totaled more than $1.416 billion in assets from more than 867,000 funded accounts, according to a tracker from Georgetown University’s Center for Retirement Initiatives.
SEE ALSO:
• Three-Quarters of Americans Favor State-Run Retirement Plans
• Washington Joins States Enacting Auto-IRAs
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
