Bipartisan legislation recently introduced in Congress would help low- and middle-income Americans build wealth and save for retirement.
The Retirement Savings for Americans Act (RSAA) would establish a program that provides eligible workers access to portable, tax-advantaged retirement savings accounts. The federal government would match contributions for low- and middle-income workers.
Full- and part-time workers and independent workers would be eligible for an account if they lack access to an employer-sponsored retirement plan. They automatically would be enrolled at 3 percent of their income and would have the option to increase or decrease their withholdings or to opt out at any time.
Low- and moderate-income workers would be eligible for a 1 percent automatic contribution and up to a 4 percent matching contribution via a refundable federal tax credit.
Accounts would stay with workers even if they switch jobs. The accounts also could be passed down to younger generations.
Participants would select from low-fee investment options including lifecycle funds tied to an estimated retirement date or index funds made of stocks and bonds.
U.S. Sens. John Hickenlooper (D-CO) and Thom Tillis (R-NC) introduced the bill in the Senate. U.S. Reps. Terri Sewell (D-AL) and Lloyd Smucker (R-PA) introduced a companion bill in the House.