House Renews Bill Expanding Retirement Coverage for Young Workers
Reintroduced bipartisan legislation could soon allow for employees below the age of 21 to begin saving in their company’s retirement plan.
U.S. Rep. Brittany Pettersen (D-CO) introduced the Helping Young Americans Save for Retirement Act on July 23 with cosponsor Rep. Michael Rulli (R-OH). The bill would expand accessibility to employer-sponsored retirement plans for workers between the ages of 18 to 20 years old.
Currently, the Employee Retirement Income Security Act (ERISA) mandates that employers who provide 401(k) plans only offer them to employees ages 21 or older. While companies can offer a 401(k) plan to employees under 21 years old, many do not due to high costs and excessive red tape, Pettersen said.
If passed, the legislation will amend ERISA to require employers to offer retirement plans to workers as young as 18-years-old and will reduce regulatory burdens that price out employers from offering these retirement plans to workers under age 21.
The bill also serves as a companion to separate legislation in the Senate, where Sens. Bill Cassidy (R-LA) and Tim Kaine’s (D-VA) introduced a bill of the same name in May.
“I started working at a young age and worked throughout middle school, high school, and college,” said Pettersen. “But like many Coloradans, I didn’t have the chance to start saving for retirement until much later. We need to update our financial systems to reflect the real lives of working people and ensure that every young American has a fair shot at long-term financial security. Thank you to Congressman Rulli for joining me in this effort to help more young people reach their full financial potential.”
Lawmakers cited research from the Plan Sponsor Council of America (PSCA), which found that 40% of workplaces apply a minimum age of 21 to participate in retirement plans. These younger employees ultimately miss out on additional savings and three years of compound interest.
“In the face of the largest generational wealth gap in American history, it’s time we give young people every tool to get ahead,” said Rulli. “Let them start saving, investing, and building real security. The sooner they start, the stronger America’s future becomes.”
SEE ALSO:
Bill to Make 401(k)s Available to 18- to 20-Year-Olds Reintroduced in Senate
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
