The coronavirus pandemic has made it even more challenging for Americans to save for retirement as millions cope with job losses, but some states are hoping to help their residents stash away cash with plans of their own.
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At least seven states have already implemented their own retirement savings plans, while another 30 are considering legislation, according to data from the AARP.
State-run options may be particularly helpful as households look for ways to shore up their finances amid the pandemic.
More than one in three people were thinking about or had already decreased retirement savings contributions, according to data from TD Ameritrade. And others are putting retirement plans on hold. Forty-four percent of people said they would delay retirement as a means to cut costs, while 51 percent were open to picking up a job.
Meanwhile, prior to the pandemic, according to the White House, 38 million Americans in the private sector did not have access to retirement plans through their employers as of last year. Workplace plans are a critical way many people can bolster their savings.
Here’s a look at plans offered, or to be offered, in some states, as compiled by AARP.
Multiple states offer workplace retirement plans with automatic payroll deductions into an IRA, often for individuals without access to an employer-provided plan.
There are usually opt-out features for employees.
However, qualified businesses may be required to offer the feature and can face penalties in some instances for failing to do so.
States offering an iteration of an auto IRA include California, Connecticut, Illinois, Maryland and Oregon
A multi-employer plan allows small businesses to band together to offer retirement benefits like 401(k) accounts.
By joining together, small businesses are more easily able to offer benefits that rival those awarded by larger corporations.
The program is generally voluntary for business owners that choose to participate. In some cases, enrollment may be automatic for workers at participating businesses – with opt-out available.
Massachusetts and Vermont are working on multi-employer plans.
Payroll Deduction Roth IRA
In New York, the state-run retirement plan features a Roth IRA.
Contributions to a Roth are made after-tax, so withdrawals would be tax-free.
Participation is mandatory for some employers, and enrollment would be automatic for workers at firms that sign up.