Did you know that roughly 50 percent of employees have no retirement savings at all?Â In an effort to increase the number of Americans who are saving for retirement, a bill known as the Automatic IRA Act of 2010 has been introduced in the Senate by Sen. Jeff Bingaman (D-NM) and in the House by Rep. Richard Neal (D-MA). The bill establishes IRA accounts for all employees and sets up automatic payroll deductions. The rationale for the legislation is based on the success of the automatic enrollment in 401(k) plans of a few years ago. When these accounts were established by law, there was a dramatic increase in participation, by about 90 percent of eligible employees. The belief is that, by establishing automatic IRA accounts, tens of millions of workers will be eligible for these plans, and an expected $15 billion will be added to savings annually.
1.Â According to the article, will there be any exemptions for the new Act, if passed?
2. According to the article, will there be any incentives for businesses to promote this?Â Do you see this as a weak or a robust plan? Explain.
3. Based on the article, what types of journal entries will accountants have to make with respect to the features of this legislation, if passed?
Staff (2010) Democrats seek to legislate retirement savings, AccountingWeb, August 31.