Monday, September 14, 2009

Obama Retirement Initiatives Draw Interest of Small Businesses, Benefits Providers

President Barack Obama has announced a number of new initiatives to promote retirement savings, a few of which have drawn the interest of employers and retirement plan providers.

The most notable of these initiatives, which he announced during his weekly radio address on Saturday, September 5, would enable workers to convert unused vacation time or overtime into cash in their retirement accounts. …

Another of Obama’s initiatives calls for the Department of Labor to publish guidance for small employers making it clear that they can provide automatic enrollment and auto step-ups into their retirement savings plans.

Until now, it has been clear that the Pension Protection Act encouraged larger employers to offer auto enroll and automatic step-ups for their employees into their 401(k) plans, but it hasn’t been clear on whether smaller employers—those with 10 to 100 employees—would have the same protections with simple IRA plans. …

Another initiative calls for improving employee education about their options for tax-favored retirement savings.

The goal of the four programs is to address the lack of retirement savings that many Americans are facing, particularly given the recession, Obama said in his address.

“I’ve heard from so many who’ve had to put off retirement, or come out of retirement, to make ends meet,” he said. “And having too little in savings not only leaves people financially ill-prepared for retirement, but also for whatever challenges life brings. It places in jeopardy so many dreams, from owning a home to attending college.”

—Jessica Marquez