Better together? State-mandated IRAs spurring growth of private 401(k)s

(Image: Shutterstock)

Who knew? The move by many states to require Roth IRA-type saving retirement plans for private-sector workers has not discouraged employers from sponsoring their own retirement plan benefits, a new study has found. In fact, in states like California, Oregon, and Illinois, employer-sponsored retirement offerings have grown at the same rates as in other states or surpassed those rates.

The study by Pew Charitable Trusts looked at data from 2021 and earlier, comparing the adoption of retirement plans in states that have required retirement savings plans to states that do not require a retirement savings plan for workers. “We were interested in how these programs affect workers, businesses, taxpayers, and in this case, the private sector market for retirement plans,” he said. “We [were asking], ‘Were these plans competitors, where maybe employers were dropping plans and going to the state plans, or is it a complementary relationship, where the state programs are actually working in synch with the private sector market,’” said John Scott, director of Pew’s retirement savings project. “The latter is what we found.”