Plan could make retirement saving easier

HOUSTON About half of US workers do not have retirement savings at all. The recently introduced legislation would try to change that by making automatic IRA contributions something nearly every business would have to offer.

Waiter Juan Lopez is like a lot of a American workers. He has no current retirement accounts and the ones he did have aren't there anymore.

"I had to pull my money for an emergency," he said.

Lopez says he world eventually like to make contributions to a retirement fund, but hasn't set one up yet. Now there is a bill in Congress that would allow employers to enroll workers into an IRA that is funded by automatic payroll deductions.

Restaurant owner Bill Sadler said, "A lot of people, especially younger people like we have working here, don't think about that and maybe they should be thinking about putting some money away for their retirement. So on the surface it looks good, and as long as they can opt out and the fees aren't excessive."

In fact workers could opt out, but if the employee wants to contribute they could kick in a minimum of three percent of their pay into the plan. The IRAs would be either Roth or traditional. The maximum annual contribution would be limited to $5,000 a year for workers under 50 and $6,000 a year for employees older than 50.

Houston CPA Bob Martin explained, "The idea is if you make it very convenient for people, like when they fill out their application when they start their job, if it's an automatic deduction from their paycheck, they're more likely to set aside some money for retirement."

Under the plan, businesses would not be forced to match any contributions, but they would see additional paperwork and accounting fees to the business to make it happen.

"Small businesses are already burdened with a lot of paperwork and so it is going to require them to do more paperwork when they hire an employee," Martin said.

If the plan passes, it would be phased in over the next few years and eventually extend to small businesses with more than just 10 workers. Businesses that fail to offer the IRA plans would be fined $100 per worker.

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