HOUSTON — Why could some big changes be coming to your 401k.
Congress is taking a closer look at how we all save for retirement, and they must not like what they are seeing because there are several bills out there to change how they work.
According to CNN, nearly 70 percent of workers in private industry have access to a 401k account, but only about 50 percent use them. And when it comes to lower-paid workers, less than 40 percent have any retirement accounts at all.
Last month, the House passed a bill called Secure Act 2.0 to overhaul the country’s retirement system. It would require employers to automatically enroll eligible workers in a retirement plan. It would set the default contribution level to 3 percent. It would go up 1 percent a year until it hits 10 percent. It would also require employers to let part-time workers who hit 500 hours a year for two years be allowed to contribute to a retirement account.
That bill is now in the Senate, and they could make changes to how the legislation would work. Those changes include making retirement plans more accessible for workers at small businesses.
They could also remove the auto-enrollment requirement in the House bill instead, providing incentives to businesses who implement it on their own.
Political watchers say it is highly likely that some form of the bill will be passed before fall heading into the mid-term elections.