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Employees under 21 are getting closer to starting their retirement savings journey a bit earlier. This week, Representative Brittany Pettersen (D-CO) reintroduced the bipartisan Helping Young Americans Save for Retirement Act to help more Americans ages 18 to 20 years old access employer-sponsored retirement plans.
Companion legislation has also been introduced in the Senate in May. Senators Bill Cassidy (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Tim Kaine (D-VA), a member of the Senate HELP Committee, reintroduced the Helping Young Americans Save for Retirement Act, aimed at removing barriers that discourage companies from offering employer-sponsored retirement plans to Americans under the age of 21.
“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” said Sen. Cassidy. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”
Currently, the Employee Retirement Income Security Act (ERISA) only requires employers who offer 401(k) plans to make them available to employees who are 21 years old and over. While an employer can offer a 401(k) plan to those under 21, many do not due to high costs and excessive red tape.
The Helping Young Americans Save for Retirement Act will require employers to offer 401(k) plans to employees as young as 18 but will reduce regulatory burdens that price out employers from offering these retirement plans to workers under 21. Specifically, the bill delays ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the 21 to start contributing to their pension. The new legislation stipulates that employees who are added to plans solely because of this bill would be omitted from mandatory audits for five years.
“I started working at a young age and worked throughout middle school, high school, and college …,” said Pettersen. “I didn’t have the chance to start saving for retirement until much later. We need to update our financial systems to reflect the real lives of working people and ensure that every young American has a fair shot at long-term financial security.”
Related: Senate’s new bill aims to enforce employers to give younger workers access to 401(k)
For employers who offer retirement plans, 40% of them have a minimum age of 21 to participate in the plans, according to Pettersen.
“In the face of the largest generational wealth gap in American history, it’s time we give young people every tool to get ahead,” said Congressman Mike Rulli (R-OH), who cosponsored the bill, along with Pettersen. “Let them start saving, investing, and building real security.”
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