Independent Contractor Compliance Blog - by Collabrus™

The Wall Street Journal reported last month that automatic IRAs may be required for all Americans.  The Journal reports that there is Obama Administration support being debated in Congress, “…to get more workers saving for retirement. The plan calls for employers to set up mandatory automatic-enrollment IRAs, retirement accounts that allow for tax-deductible contributions…”

If such a law passes, companies would be required to offer a tax-deferred retirement-savings plan to employees, such as IRA accounts, through direct payroll deposits.  The current version reportedly applies to any business that, “…employs 10 or more workers, and have been in business for at least two years…”
The enrollment would be automatic and mandatory but could be changed by the employee in order to raise or lower the amount, or percentage, of withholding for the IRA.

There are good and bad aspects to this proposal.

More companies will cover workers, which helps force individuals to begin planning for their retirement. 
However, the costs of administering these plans will fall on the shoulders of many small businesses not able to withstand this additional payroll cost. 

Some critics say it’s another example of the federal government telling us we aren’t mature enough to plan for our own future and to make our own decisions, so the government should make our decisions for us.

Will it become law?

At this point, it’s unclear whether Congress will vote to include the enforced IRA program in the final rendition of proposed bill or not.  Even though many members of Congress swore to push this new program through by early this month, I have not found any updated information on this bill.

If it passes it’s another reason to consider using a professional contingent employee management company.

Most top notch contingent employee management companies, like Collabrus, already provide IRA 401 (k) plans as a standard benefit for their client-employees.  Not only does Collabrus have the experience and ability to economically cover the workers, but usually for less cost than the client company can provide the same benefit.