New Bill Aims to Solve for the Retirement Plan Coverage Gap
The Portable Retirement and Investment Account Act of 2021 would create accounts for people soon after they are assigned a Social Security number that they could contribute to whenever they don't have access to an employer-sponsored plan.
Congressman Jim Himes, D-Connecticut, and Senator Mark Warner, D-Virginia, have introduced the Portable Retirement and Investment Account (PRIA) Act of 2021, designed to provide a retirement savings vehicle to Americans who don’t have access to one.
The legislation would establish a Portable Retirement and Investment Account (PRIA) Fund and a board responsible for establishing regulations for the fund. The bill says the board will manage the fund in the same manner as the Federal Thrift Savings Plan is managed.
The PRIA Act authorizes the director to invest each account into a target-date fund (TDF) based on when the account holder will reach age 65. This is called a PRIA Basic Account. Once assets reach a certain amount, the director would contract with an entity to act as trustee and manage the investments. Individuals could elect to roll over their PRIA Basic Account to a PRIA Choice Account, which would allow them to select their own investments.
Accounts for individuals would be established soon after a Social Security number is issued for them. Accounts would start with a $500 contribution, and the government would deposit $50 into the account of anyone who completes financial literacy training.
Employers could allow individuals to contribute to their PRIA accounts via payroll direct deposit, and employers could also implement automatic contribution arrangements as well as automatic contribution increases. Additionally, employers would be able to contribute to the accounts on behalf of individuals. However, this would only be for individuals whose employer does not offer a retirement plan or who are not eligible to participate in their employer’s plan or individuals whose employment consists of work through mobile platforms. Catch-up contributions would be allowed for individuals age 50 and older. Individuals could also designate all or a portion of their contributions as Roth contributions.
Account holders age 18 and older could elect to rollover their PRIA account to an individual retirement account (IRA) once their account balance reaches $15,000.
“Americans are more likely to change jobs and be engaged in non-traditional forms of work than they were a generation ago, but our policies haven’t kept up with these shifts,” Warner said in an announcement. “As more and more Americans hold multiple jobs across a career, a year, and even a day, PRIA will provide more workers with access to flexible, portable benefits such as retirement savings that will carry with them from employer to employer and gig to gig.”