Friday, November 20, 2015

2 big pieces of news in the world of retirement planning

by Christian Schappel



Two very interesting things happened in the world of retirement planning this week that employers will want to take note of. 

Let’s start with the more earth-shaking of the two:

No. 1: State-run retirement plans

The Obama administration wants to make it easier for states to provide individuals whose employers don’t offer retirement plans with access to such plans.

As a result, the DOL issued a proposed rule that would allow and guide states to establish state-sponsored IRAs in which individuals could automatically be enrolled. According to the proposal, individuals must be given the opportunity to opt out, but absent taking that action, they’d be enrolled in the plans.

As for how this proposed rule would affect employers: They’d be responsible for coordinating and making the payroll deductions that would be deposited into the plans.

The proposed rule also contains guidelines on creating state-based, ERISA-compliant 401(k) plans that are open to small businesses and workers.

The states themselves or third-party vendors would act as the retirement plan fiduciaries for the IRAs.


The proposed rule has drawn a lot of criticism already, much of which has come from financial industry insiders who fear the proposal could undercut private sector ventures.

Click here for entire article. 

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