The State of Connecticut Is Ready To Enter The Retirement Plan Business - And That Is A Good Thing

Publisher: Madison Pension Services, Inc.

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The State of Connecticut Is Ready To Enter The Retirement Plan Business - And That Is A Good Thing

By the slimmest of margins, the state of Connecticut recently approved a bill establishing a state-run retirement plan for private sector workers. Here is how it would work. Employers with at least five employees that do not currently offer a workplace retirement plan would be required to set up an automatic payroll contribution plan for their employees. All employees who are at least 19 and who earn at least $19,000 per annum would be automatically enrolled, once they have been employed for 120 days. The payroll deferral deduction would be 3% of their salary. The contributions would be invested in a ROTH IRA. That means that the workers would be deferring after-tax dollars into the program. It also means that since their deferrals come from after-tax money, neither the Federal government nor the State of Connecticut would experience a loss of tax revenue. Employees could choose to opt out. Or, they could also choose to increase their deferral rate. Right now, there is...