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8 October

Legislative Update - Extending Retirement Plan Access to Younger Workers

October 8, 2024 By Nick Stucko Education  

A bipartisan bill introduced in the House of Representatives on August 2, 2024, aims to encourage younger workers to start saving for retirement as soon as they enter the workforce. The Helping Young Americans Save for Retirement Act (H.R. 9281) was introduced by Rep. Brittany Pettersen (D-CO) and co-sponsored by Rep. Tim Walberg (R-MI).

 The proposed legislation would amend the Employee Retirement Income Security Act (ERISA) to help more Americans ages 18 to 20 years old gain access to employer-sponsored retirement plans by removing barriers that discourage companies from offering these benefits to younger employees.   

 

ERISA Eligibility Requirements

As it stands today, ERISA only requires that employers who offer a 401(k) plan make their plan available to employees who are 21 years and older. Although employers can offer a retirement plan to employees younger than 21, many choose not to due to higher costs. This bill would lower the participation age to 18 years old while removing any provisions that make it expensive to include younger workers.

A recent survey showed that 40% of plans currently have a minimum age requirement of 21. For 18-year-olds just starting out, this means that they would potentially miss out on three years of savings. According to Rep. Walberg, “Empowering young Americans to start saving early not only fosters financial independence but also strengthens retirement security.”

Similar Bill Proposed in November 2023

This proposed bill follows the Helping Young Americans Save for Retirement Act (S. 3305) introduced in November of 2023 by Sen. Bill Cassidy (R-LA), Ranking Member of the Senate HELP Committee, and Sen. Tim Kaine (D-VA). Similar to the Helping Young Americans Save for Retirement Act, this proposed legislation would lower the minimum participation age for ERISA-covered defined contribution plans from age 21 to age 18.

The goal of both proposed bills is to address the eligibility challenges that many young people face, helping them save for retirement and build a secure financial future.

Effective Date

If enacted, the effective date for the proposed bill will be January 1, 2026. If you have any questions regarding this proposal or ERISA eligibility requirements, please contact your local Spectrum representative.

  

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ERISA Workplace Retirement Plan Limits

The federal government annually publishes updated qualified retirement plan limits, which impact the contributions, benefit accruals, and compliance of ERISA covered qualified retirement plans. The below tables summarize the most significant changes in recent history.

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