First State-Run Retirement Plan for Private-Sector Set to Launch
Washington State will open its plan on January 1, 2017.
By Rebecca Moore
June 02, 2016 - PLANSPONSOR
Starting January 1, 2017, Washington will be the first state to offer a
state-run retirement plan for private-sector workers.
According to the Puget Sound Business Journal, the Small Business Retirement
Marketplace will be an Internet site through which individuals and employees of
small companies can set up retirement plans. It will operate much like the
Washington Health Exchange does now for individuals to buy health
insurance.
Through the portal, workers will be able to choose among several established
retirement plan providers, which will be screened by Washington State, the news
report says. The system will have no contribution minimums, and such a plan will
remain with the person even when they switch jobs. It will allow employees to
contribute through an employersf payment system, so that contributions will be
automatically deducted from a paycheck, but if an employer doesnft want that,
the system also can regularly deduct contributions from a personfs bank account,
or individuals can make contributions when they wish.
Mark Iwry, senior advisor to the U.S. Secretary of the Treasury was in
Seattle to talk about the marketplace. gFor the employer [that] does not sponsor
a 401(k), the retirement marketplace would make it easier to select a provider
and adopt a plan,h he said, according to the news report, gwith the assurance
that the provider has been vetted, and the fees are not excessive.h
Last November, the U.S. Department of Labor (DOL) published a notice of
proposed rulemaking and an interpretive bulletin meant to
guide states as they create such retirement programs. However, retirement
plan industry
groups contend the DOL proposal for state-run retirement programs would
result in a confusing patchwork of laws and other unintended consequences. And
some say such plans will
not close the retirement savings gap much.
Research from the Center for State and Local Government Excellence (SLGE) suggests
a national auto-IRA program would be more efficient.