The automatic revolution

There is a growing concern among American economists, financial analysts and policy makers that Americans are not financially prepared for retirement. That is why the authors introduced a bill to offer employees without access to an employer-sponsored savings plan the opportunity to save through an automatic IRA. To offset administrative costs, a small, temporary tax credit is provided to employers. Meanwhile, the decline in the number of American workers covered by traditional pension plans has placed a bright spotlight on the strengths and weaknesses of 401(k) savings plans. Unfortunately, not all employees make optimal use of their 401(k) plan. To address these concerns, Congress incorporated several 401(k) provisions in the Pension Protection Act of 2006.