Not quite two years ago, Sen. Marco Rubio (R-Fla.) said the federal government’s Thrift Savings Plan (TSP) should be opened to private sector workers. Now legislation has been introduced in the U.S. Senate that would take a step in that direction.
The American Savings Act, introduced by Sen. Jeff Merkley (D-Ore.), 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 (called the American Savings Account) — with investments modeled on the TSP.
Employees could choose how much to save in pre-tax dollars to suit their needs. The default would be set at 3%, but workers would have the option at any time to opt out, or to lower or raise their contributions up to a maximum of $18,000 per year. Account holders would get the same range of low-fee investment choices currently available to federal workers through the federal Thrift Savings Plan, including lifecycle funds.
Contributions to an ASA 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, according to the announcement. An independent board of directors would manage the investment of the funds. Additionally, the accounts would be open to part-time as well as full-time workers.
A press release about the bill says that employers would send employees’ ASA savings to the federal government alongside employee tax withholdings, and workers would control their own accounts directly through a website.
The legislation is supported by AARP and UNITE HERE.
The American Savings Act, introduced by Sen. Jeff Merkley (D-Ore.), 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 (called the American Savings Account) — with investments modeled on the TSP.
Employees could choose how much to save in pre-tax dollars to suit their needs. The default would be set at 3%, but workers would have the option at any time to opt out, or to lower or raise their contributions up to a maximum of $18,000 per year. Account holders would get the same range of low-fee investment choices currently available to federal workers through the federal Thrift Savings Plan, including lifecycle funds.
Contributions to an ASA 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, according to the announcement. An independent board of directors would manage the investment of the funds. Additionally, the accounts would be open to part-time as well as full-time workers.
A press release about the bill says that employers would send employees’ ASA savings to the federal government alongside employee tax withholdings, and workers would control their own accounts directly through a website.
The legislation is supported by AARP and UNITE HERE.
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