401(k) Specialist Issue 2 - 2023 - 31

" ...this might very
well be the best
time ever to be a
provider of new
401(k) plans "
-J.D. Carlson, Plan Design
Consultants
SECURE 2.0 tax credits will be a bigger
influence and will spark growth in our new
plan installs nationally. "
Oregon started enrolling private sector
employees in OregonSaves-the first
state-run plan in the nation-6 years ago.
Research shows Oregon saw an increase in
the share of new plans increase from 6.7% on
average between 2013 and 2016 to 8.5% on
average in the years after OregonSaves started
operations in 2017.
In Illinois, Pew found the average share
of new plans increased from 5.3% between
2013 and 2017 to 6.2% after Illinois Secure
Choice started enrolling savers in 2018
through 2021.
The creation of new 401(k) plans has been
aided by tax credits Congress authorized and
expanded through the SECURE Act in 2019
and SECURE 2.0 in 2022 that incentivize
companies by lowering the cost to start a
401(k) plan.
The WSJ article also points out that for
workers, one of the main benefits of a 401(k)
is that it allows those under 50 to save up to
$22,500 a year, compared to only $6,500 for
Roth IRAs, the vehicle most state programs
use. The limits for those 50 and older rise to
$30,000 and $7,500.
Interestingly, the WSJ piece also quotes
CalSavers Executive Director, Katie Selenski,
saying she welcomes the state's trend of
higher adoption of 401(k) plans, even though
it reduces participation in CalSavers, which
has $483 million in assets.
" State mandates are providing an opportunity
for private plan providers to present
the case for their products and that is a good
thing, " she said.
The American Retirement Association
also took note of the WSJ piece at the time,
saying via LinkedIn:
" Great news that more small businesses are
offering retirement savings plans to their employees,
and it's encouraging to see the impact this is having
on millions of workers who previously lacked
access to such benefits. "
ARA CEO Brian Graff added on LinkedIn,
" We Can Do This! And we don't need
the Federal Government to create an unfairly
competing subsidized 401(k)-style retirement
plan to interfere with the progress. "
Graff recently warned NAPA 401(k)
Summit attendees of what ARA sees as a
looming threat to the private retirement
plan market posed by the pending reintroduction
of bipartisan legislation seeking to
create a federally run retirement plan for
low- to moderate-income Americans lacking
coverage based on the model of the federal
government's Thrift Savings Plan.
That legislation- " The Retirement
Savings for Americans Act " -is expected
to be reintroduced in Congress this year. A
federal plan if enacted would be expected to
negatively impact participation in existing
state-run programs. There are currently
11 states that have established privately
managed auto-IRA programs. Since 2017,
nearly three-quarters of the 50 states have
either proposed or enacted legislation for a
state-sponsored retirement program.
ISSUE 2 2023 | 401kSpecialist.com
31
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401(k) Specialist Issue 2 - 2023

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