Despite the fact that Congress helped kill the exemption of state run automatic IRA programs from ERISA, states are still going ahead with these plans and I ask why?
I believe that the idea of state run auto IRAs is a good thing because I believe anything that will help increase retirement plan coverage is a good thing However, I still believe that open multiple employer plans is a better alternative. It’s been 5 years since the Department of Labor effectively killed Open MEPs and they’ve done nothing to change that, same with Congress.
I think state run plans are a bad idea because I don’t believe they will actually be popular because despite our moderate politics, we have a libertarian streak when it comes to government and our money. A Pew study showed that among 1600 business owners, only 13% of those with a plan would drop their current option for a state run plan. Also, 50% of those without one would choose a private option over a government plan.
Retirement plan coverage is something I support, but I think the private sector utilizing higher savings limits under qualified plans can do a better job that states can with their auto IRA programs.