Published Winter 2017
Though well-intentioned, states considering mandating automatic enrollment payroll deduction Individual Retirement Accounts (IRAs) are likely to hurt the very workers they think they are helping. The reason is simple—state autoIRAs are a poor substitute for employer-provided plans. Workers are significantly limited in how much they are allowed to contribute; employers are prohibited from contributing at all; fewer small plans will be started; many existing small plans will be terminated, and important worker protections will be lost. Instead of mandating that employers without a plan offer a state IRA, policymakers ought to make it easier for small business to offer retirement plans that best serve workers’ needs.