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Compliance February 26, 2009
President’s Budget Aims to Boost Retirement Savings
President Barack Obama’s budget blueprint released on Thursday includes proposals for an automatic IRA plan for workers and an expansion of the Saver’s Credit.
Reported by Rebecca Moore
According to a press release from The Retirement Security Project, the Automatic IRA proposal would pursue universal retirement savings coverage by allowing employees not covered by qualified retirement plans to save for retirement through automatic payroll deposit IRAs. The Automatic IRA proposal was introduced in the 110th Congress as the Automatic IRA Act of 2007 (see “Legislation Targets Employers Without Retirement Plans’).
Under the Administration’s proposal, employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems.
In addition, the Administration’s budget proposes to expand retirement savings incentives for working families by modifying the existing Saver’s Credit to provide a 50% match on the first $1,000 of retirement savings for families that earn less than $65,000.
Other Budget Proposals
According to news reports, President Obama seeks to raise $634 billion through new taxes on upper-income Americans and cuts in government spending over the next decade to pay for his promised health-care expansion.
In addition, the budget would limit pay raises for federal government employees. Federal workers would be limited to a 2% pay increase average in 2010, and the military would be limited to 2.9%.