The Department of Labor will issue guidance on state mandates that require small businesses to automatically enroll employees in IRAs by the end of the year.
That announcement was made at Monday’s Conference on Aging, hosted at the White House.
At least 20 states have proposals in the pipeline that would require businesses with, in some cases, as few as five employees to enroll employees in savings plans. Initiatives in Oregon, Washington and Illinois have already passed.
But confusion as to whether or not employers that are required to enroll workers will be subject to the Employee Retirement Income Security Act has stalled some efforts at the state level.
The DOL’s guidance will address those questions and pave the way for wider adoption of enrollment mandates at the state level, according to President Obama, who said he has instructed to DOL to post guidance by the end of the year during his opening remarks at the Conference on Aging.
Obama said every budget proposal he has advanced included a federal mandate for comprehensive IRA enrollment, but Congressional inaction has slowed the effort.
“The good news is that states are stepping up,” said the president, who vowed regulatory support of that trend at the federal level.
The White House also announced a new initiative with private-sector software developers to enhance Social Security benefit estimate tools. Betterment, Financial Engines and Hello Wallet were three fintech companies named as working with new data from the Social Security Administration to develop enhanced benefit projection software.
And new guidance issued by the DOL will facilitate greater adoption of longevity annuities in 401(k) savings plans, by addressing sponsors’ fiduciary obligations to monitor insurance company’s ability to meet future obligations.
In a press release, the White House named several private-sector sponsors of 401(k) plans as leading the way in plan design.
Alaska Airlines, The Clorox Company, Vermeer and United Technologies Corporation all automatically enroll employees at 6 percent of salary, and automatically escalate deferral rates annually.
UTC is also launching and education program to encourage workers to keep assets in plan after they retire, as opposed to rolling assets over into “often higher-fee IRAs,” according to the White House press release.