Readers may assume that most companies sponsor 401(k) or other tax-deferred retirement account options to their employees. Yet the Treasury Department estimates that as many as 78 million working Americans might not have this option in their workplace.
Granted, local, state and federal government employees are well represented in this region. Highways and public transportation in Greenbelt, Maryland provide an easy commute to Washington, D.C., while offering what many residents find to be a more residential feel than living in the District. For such workers, employer-sponsored retirement benefits may be taken for granted.
However, self-employed and part-time workers may not be eligible for 401(k) plans. Smaller companies may also be unable to provide retirement account options to their workers. For workers in this group, there could be a very real risk of financial hardship when they are no longer able to work.
At his recent State of the Union address, President Obama proposed a solution called myRA. The new investment vehicle would operate similar to a government bond, with a guaranteed rate of return. Enrollment in this option might even be automatic, unless a worker specifically opted out of the plan.
If the proposal becomes a reality, employers may need to revise their employment contracts, employee handbooks and other internal publications. There are detailed laws regulating the administration of private sector, employer sponsored retirement or pension accounts. For example, the Employee Retirement Income Security Act can subject an employer to significant penalties if its requirements are not met. An employment attorney can help employers meet their fiduciary responsibilities and avoid an ERISA investigation or similar employment dispute.
Source: The Wall Street Journal, “Will the ‘myRA’ retirement plan take off?” Matthew Heimer