Your next re­tire­ment plan may be o≠ered by city hall

The Denver Post - - BUSINESS - By Bloomberg News

More than a third of full-time pri­vate-sec­tor work­ers in Amer­ica don’t have a way to save for re­tire­ment on the job. On Tues­day, the U.S. Depart­ment of La­bor of­fered a new way to fill that gap: Let cities and coun­ties get in­volved.

A new rule would clear reg­u­la­tory bar­ri­ers that might other­wise stop large mu­nic­i­pal­i­ties such as New York City from set­ting up plans for all work­ers — not just those who work for lo­cal gov­ern­ment. Of­fi­cials in the Big Ap­ple, as well as Seat­tle and Philadel­phia, have al­ready ex­pressed in­ter­est.

The out­go­ing Demo­cratic ad­min­is­tra­tion of Pres­i­dent Barack Obama had wanted to cre­ate au­to­matic in­di­vid­ual re­tire­ment ac­counts that would fol­low work­ers through their ca­reers. That went nowhere in the Repub­li­can con­trolled Congress, but then states started ex­plor­ing the idea of launch­ing their own, so-called auto-IRA pro­grams.

Now five states — Cal­i­for­nia, Ore­gon, Illi­nois, Mary­land, and Con­necti­cut — are set­ting up state-run op­tions. They’ll be re­quir­ing em­ploy­ers who don’t of­fer their own plans to con­nect work­ers to state auto-IRAs. The goal is to sign up work­ers and deduct con­tri­bu­tions from pay­roll in ways that makes sav­ing much eas­ier.

The La­bor Depart­ment gave its fi­nal bless­ing to these state plans in Au­gust. The U.S. gov­ern­ment made clear that state au­toIRAs were le­gal, and wouldn’t be sub­ject to the com­pli­cated fed­eral rules that gov­ern other re­tire­ment plans.

Of­fi­cials are amend­ing that rule to let lo­cal and mu­nic­i­pal gov­ern­ments get in on the act.

Not ev­ery city or county could set up an auto-IRA, how­ever. Out of al­most 90,000 lo­cal gov­ern­ments in the U.S., the La­bor Depart­ment es­ti­mates only about 88 would be el­i­gi­ble. First, ju­ris­dic­tions would need the author­ity un­der state law to set up the pro­gram. They also couldn’t over­lap with an ex­ist­ing statewide re­tire­ment plan.

Fi­nally, they’d need to have a pop­u­la­tion greater than the least-pop­u­lous state: Wy­oming, pop­u­la­tion 586,000. The U.S. Cen­sus Bureau said Den­ver’s pop­u­la­tion in July 2015 was 682,545.

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