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Add "location" to the factors that can determine whether you have access to a workplace retirement plan.
As federal lawmakers wrap up this session of Congress without taking action on bills that aim to expand the ranks of U.S. workers saving for their golden years, state officials across the country are already beating them to the punch.
In the last several months, California and Illinois each have started phasing in a retirement-savings program that will automatically enroll private-sector workers who lack access to an employer-sponsored plan.
Oregon, meanwhile, is in its second year of signing up employees for its program, and a handful of other locales — including Maryland, New York, Connecticut and the city of Seattle — are working toward getting similar strategies off the ground.
Overall, in the last six years, more than 40 states have either implemented or considered legislation intended to help the estimated 55 million people without access to a retirement plan through their job, according to Georgetown University's Center for Retirement Initiatives. In California, that number alone is an estimated 7.5 million people.
The ultimate goal? "Retirement security for all American workers," said California Treasurer John Chiang, a key architect of the CalSavers program.
By and large, retirement security may be elusive for many workers, according to various research. For example, about 42 percent of Americans have less than $10,000 set aside for retirement, according to a recent study from GoBankingRates.
Separate data from AARP show that workers are 15 times more likely to save for retirement if they can do so through a workplace plan.
And while large employers are more likely to offer an option, cost and administrative burdens can stand in the way of small-business owners' pursuit of setting up a plan. Thus, these state-run programs largely will increase access to a workplace plan for that contingent of workers.
Lawmakers on Capitol Hill have been unable to get legislation through both chambers that — among many other changes to retirement savings and the tax code — would make it easier for small businesses to band together to offer 401(k) plans, which would let them share the financial and administrative burdens.
"Everyone agrees across party lines that it's a good idea," said Brian Pinheiro, a partner in the Philadelphia office of law firm Ballard Spahr and an expert on federal retirement law. "By itself it would have a chance of passing, but it always depends on what it's tied to."
The Labor Department also is exploring whether it can achieve that through regulatory changes instead of statutory changes via Congress.
Fives states — Massachusetts, New Jersey, New York, Vermont and Washington — have chosen to take a route that is similar to the congressional provision or otherwise makes participation voluntary. That's in contrast to the state-run auto-enrollment programs, which require businesses of a certain size to participate (although workers are permitted to opt out).
For workers who end up in one of these auto-enrolled accounts, it's important to understand how they differ from a 401(k) plan.
For starters, money deducted from your paycheck — assuming you don't opt out — goes into a Roth individual retirement account that is managed by an investment company, not your state government. Roth contributions are not tax-deductible as they are with 401(k) plans. (At some point down the road, the programs also might offer traditional IRAs, depending on the state.)
Yearly Roth IRA contribution limits also lower. You can contribute $5,500 in 2018 ($6,000 in 2019), although higher earners are limited in what they can contribute, if at all. Also, anyone age 50 or older allowed an additional $1,000 contribution.
In comparison, with 401(k) plans, the contribution limit is $18,500 in 2018 and $19,000 next year, with the 50-and-over crowd allowed an extra $6,000. Income limits also apply if you're considered a highly compensated employee.
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Meanwhile, Roth IRAs — unlike, in general, 401(k) plans — also come with no penalty if you withdraw your contributions before age 59½.
This means that if a worker wants to take back any contributions before retirement, there is no penalty because they already paid taxes on it. (For earnings, however, there could be a tax and/or penalty.) In other words, it could become an emergency fund more easily instead of being exclusively for retirement.
"If the goal is to improve the headcount — the number of people covered by a workplace plan — then these state programs will do a great job," said Jack Vanderhei, research director for the Employee Benefit Research Institute. "The problem is that just because you have someone in a plan, it doesn't mean they'll have enough for retirement."
Additionally, they won't come with the incentive of an employer match on work contributions, as 401(k) plans often do.
"Sometimes workers put in contributions because they know they'll get free money," Vanderhei said. "We've seen participation rates be lower, or lower contributions, when there is no employer match."
Nevertheless, supporters point to the early success of OregonSaves. Started in mid-2017, the program now has 2,390 companies registered. While 18,318 workers have opted out, 49,661 are enrolled and have saved an aggregate $10.4 million in their accounts. The average contribution rate is 5.9 percent of gross pay and the average monthly contribution is just above $113.
Among the companies already enrolled is Statehood Media in Bend, Oregon. The business was one of the first to enroll in 2017 and boasts 100 percent participation, said Kevin Max, founder of the 11-person company.
"Our team loves the simplicity and the mindless-saving-is-effective-saving aspect to the program," Max said.
Not everyone is a fan, including the U.S. Chamber of Commerce.
"Rather than mandating these plans, the Chamber encourages states and the federal government to offer greater incentives for employer-provided plans," said Aliya Robinson, executive director of retirement policy for the U.S. Chamber of Commerce, in a statement emailed to CNBC. The group supports efforts to let small businesses team up to offer plans, along with giving more tax credits for those that start and maintain one.
Additionally, there remains a legal and regulatory cloud hanging over them.
Some experts say they run afoul of a law called ERISA, which imposes a fiduciary duty on employers that offer workplace retirement plans. Obama-era regulators had provided these state programs an exclusion to the law, which was overturned by the Trump administration.
CalSavers faces a lawsuit that challenges the legality of it, focusing on its auto-enrollment aspect. Supporters of the program, however, say it is on solid legal ground.
Back in Washington, there's a good chance that the new Congress in 2019 will once again consider measures that would make major improvements to the retirement system for the first time in more than a decade. The question will be whether any measure can clear both the House and Senate.
"We'd love to see Washington, D.C., take more comprehensive action so it's not just select people in certain states that have access to a retirement plan at work," said Chiang, California's treasurer.