A bipartisan bill to help more Americans aged 18 to 20 years old start participating in 401(k)s was reintroduced in the Senate Monday by Senator Bill Cassidy (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Tim Kaine (D-VA), a member of the Senate HELP Committee.
They say the Helping Young Americans Save for Retirement Act would help more Americans aged 18 to 20 years old access employer-sponsored retirement plans by removing barriers that discourage companies from offering these benefits to younger employees.
“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement. This legislation empowers American workers, giving them more opportunities to plan for a secure retirement,” Cassidy said.
“Contributing to a retirement plan early on sets people up for financial security in the future,” added Kaine. “I’m proud to introduce this bipartisan bill that would ensure younger workers have access to their employer-sponsored retirement benefits when they are starting out in their careers.”
Specifically, the bill would lower the participation age of Employee Retirement Income Security Act of 1974 (ERISA)-covered defined contribution (DC) plans to 18 years old under certain circumstances, providing access to retirement savings plans for eligible workers in this age range who currently don’t have access to their employers’ plans. Covered plans would still be able to set a minimum age threshold up to 18 years old.
This legislation also removes costly provisions that would otherwise make covering younger workers expensive. Specifically, the bill delays ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the age of 21 to start contributing to their pension. The legislation also exempts 18- to 20-year-old employees from testing related to retirement funds that would otherwise increase the cost of administering retirement plans for these employees.
The Helping Young Americans Save for Retirement Act is supported by BPC Action, Edward Jones, the American Benefits Council, LPL, Insured Retirement Institute, the National Rural Electric Cooperative Association, TIAA, and Transamerica.
“This measure will not only help younger workers get into the habit of contributing to their retirement savings, but it will also provide additional years for their savings to grow to ensure a more secure financial future,” said Paul Richman, Chief Government and Political Affairs Officer at the Insured Retirement Institute.
“Reducing the eligibility age is very important because saving at younger ages results in far greater retirement savings due to the time value of money. And saving at an early age can establish savings habits that can last a lifetime,” said Josh Rundle, Head of Retirement Solutions at Transamerica, in a letter stating the company’s support for the bill to Sens. Cassidy and Kaine.
Full text of the bill—which was first introduced in Nov. 2023, is available here.
The bill may soon have companion legislation in the House, as last August, Rep. Brittany Pettersen (D-CO) and Rep. Tim Walberg (R-MI) introduced a bill by the same name.
SEE ALSO:
• Bipartisan Bill to Widen Savings Access for Young Employees
• Lawmakers Push Spousal Protection Legislation in 401(k) Plans
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.