Department of Labor (DOL) finalized rules that make it easier for more consumers to save for retirement through state-operated retirement-savings programs.
As of press time, eight states—California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon and Washington—approved legislation that establishes a retirement-savings plan for residents who don’t have access to one at their workplace. More states are exploring similar plans in light of DOL’s rules, experts say.
DOL’s rules allow state-operated retirement plans to dodge certain provisions of the Employee Retirement Income Security Act (ERISA) as long as the state runs the plan, employers have minimal participation and employees aren’t forced to participate. DOL says ERISA provisions were an impediment to state-operated plans.
Depending on what’s offered in each state, contribution limits will range between $5,500 and $17,500. Sarah Mysiewicz Gill of AARP says individuals choose their investments, but the selection typically is limited to low-cost, low-risk mutual funds.