The American Savings Act has been reintroduced by Sen. Jeff Merkley (D-Oregon).
Currently, federal workers and Congress members use the Thrift Savings Plan (TSP). This reintroduced plan would be modeled after the TSP, giving every worker (not just federal employees) without access to a savings plan for retirement the opportunity of having their savings account specifically for just that. A large benefit to this is that these retirement savings accounts can be taken anywhere, even though job transitions.
Merkley says, “It shouldn’t matter whether you work part-time or full-time, as an employee or a contractor, or for a huge corporation or a tiny business, every American worker deserves access to a financially secure retirement. With private-sector pensions becoming rarer and rarer, Social Security and retirement savings are more important to retirement security than ever. That makes our mission clear. We need to strengthen Social Security, and we also must expand high-quality retirement savings options to all workers.”
Merkley has also noted that around 55 million Americans are without access to a retirement savings plan. If passed, this legislation could potentially allow employers to send their employees’ savings in an American Savings Account (ASA) to the federal government right along with the already processed employee tax withholdings. The great thing about this is that employers wouldn’t be forced into a new administrative process, therefore providing a seamless transition. In the beginning, it would defer 3% of salaries of workers. However, that can be changed by participants to 2% if preferred, and the contribution maximum would be capped off at $18,000 a year.
Like the TSP, the ASA would include the same investment options, even at the same low cost. Workers would control accounts through a website for quick and easy manageability. Additionally, workers would have the opportunity to roll any other individual retirement accounts they already have, such as an IRA for example, into the ASA. The ASA could also be rolled into an employer-sponsored 401(k) or 403(b) plans.
There are undeniable benefits. ASAs would be:
All workers would be able to determine just how much they want to save as well as how much they want to invest!