A new bipartisan bill aims to enhance access to 401(k) plans for teen workers, targeting Americans aged 18 to 20 for employer-sponsored retirement plans.
The Helping Young Americans Save for Retirement Act, introduced by Senators Bill Cassidy (R-LA) and Tim Kaine (D-VA), would lower the participation age of Employee Retirement Income Security Act of 1974 (ERISA)-covered defined contribution (DC) plans to 18-year-olds uncertain certain circumstances, according to a statement released by the U.S. Senate Committee on Health, Education, Labor and Pensions.
Covered plans would still be able to set a minimum age threshold up to 18 years old.
“Americans who decide to enter the workforce instead of going to college should have every opportunity available to save for retirement,” said Senator Cassidy in the statement. “This legislation increases those opportunities and empowers working Americans to plan for a secure retirement.”
“Americans who decide to enter the workforce instead of going to college should have every opportunity available to save for retirement.”
Senator Bill Cassidy
The bill would remove costly provisions from organizations who cover younger workers under an employer-sponsored plan. For example, the legislation would delay ERISA provisions that require businesses to undergo mandatory audits if employees under the age of 21 are allowed to contribute to a pension. It would also exempt 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 legislation advocates for expanding 401(k) plans for teen workers, encouraging them to commence building their retirement savings early in their careers. This initiative is particularly crucial as young Americans face increasing financial insecurity and the challenges of escalating daily expenses and inflation.
“Young people who are starting out in their careers should be able to access employer-sponsored retirement plans like everyone else,” added Senator Kaine. “This bipartisan bill would help more Americans access critical retirement benefits and put them on a path to a better financial future.”
The Helping Young Americans Save for Retirement Act is supported by the American Benefits Council, LPL Financial Holdings Inc., and BPC Action.
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