Sunday, September 06, 2009
In an effort to boost savings by employees, President Obama is seeking to make several changes that will make it easier for employees to save for retirement. Some of the changes can be implemented immediately by the President - others will require Congressional law changes. The key changes are:
a. Taxpayers will be able to buy U.S. savings bonds with their tax refunds just by checking a box on their tax forms.
b. Employees will be allowed to contribute their pay attributable to unused vacation time to their 401(k) plans.
c. Workers would be automatically enrolled in workplace retirement plans, and would have to opt out if they do not want to participate. This is the opposite of current rules, where workers now have to opt in.
d. Legislation will be sought to allow workers without workplace retirement plans to have contributions made to IRAs through payroll deposit contributions at their places of work.
The voluntary nature of such measures is to be applauded. Methods of enhancing savings opportunities without unduly burdening employers is also good policy - so hopefully when formalized these rules will be implemented in a way that do not increase employer costs.