Senator Jeff Merkley, D-Oregon, has introduced a bill aimed at improving the retirement situation in America by creating retirement savings accounts for everyone whose employer does not provide one.

The American Savings Act, according to Merkley’s website, “would give every worker without access to a retirement savings plan through their employer the ability to save for retirement through their own, personal retirement savings account modeled on the same high-quality retirement savings plan already used by federal workers and members of Congress.”

American Savings Accounts (ASAs) would be portable, with a single account for life; people changing jobs would not have to worry about rollovers or having to deal with account transfers.

Read: Portable retirement solutions: ABGI, Retirement Clearinghouse team up

Even the self-employed would be able to have an account.

Employers using ASAs would not have to handle account investments or administration; they would merely collect employee contributions and send them to the federal government for processing, in the same way they send employee tax withholdings.

Read: 3 plan providers talk about myRAs

Contributions would begin at 3 percent per paycheck, although employees would be able to adjust that amount downward to as little as 2 percent, increase it to as much as $18,000 per year or opt out altogether.

Investment options would be the same as those in federal employees’ Thrift Savings Plan (TSP) plan, with comparably low costs, according to the senator’s website, and workers would control their own accounts via a website. The money would be managed by an independent board of directors, contributions would be tax deductible and participants would be able to rollover any previous IRAs into their ASA or roll their ASA funds into an employer-sponsored 401(k) or 403(b) plan.

The legislation is supported by AARP, UNITE HERE and the Main Street Alliance.

Instant Insights /

Merkley introduces universal retirement savings in American Savings Act

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