Senator Tim Kaine (D-VA).
Young working Americans are getting closer to starting their retirement savings journey a bit earlier. Last week, Senators Bill Cassidy (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Tim Kaine (D-VA), a member of the Senate HELP Committee, reintroduced the Helping Young Americans Save for Retirement Act, aimed at removing barriers that discourage companies from offering employer-sponsored retirement plans to Americans under the age of 21.
The legislation, which was introduced in the House in 2024, would help more Americans aged 18-20 access employer-sponsored retirement plans by removing barriers that discourage companies from offering these benefits to younger employees. Although companies may allow employees under 21 to participate in a 401(k) plan, they are not obligated to do so under the Employee Retirement Income Security Act of 1974, and many employers choose not to extend 401(k) eligibility to younger workers until they have a year of employment with the company.
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“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” said Dr. Cassidy. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”
“Contributing to a retirement plan early on sets people up for financial security in the future,” said Senator Kaine. This bipartisan bill "would ensure younger workers have access to their employer-sponsored retirement benefits when they are starting out in their careers.”
The bill would lower the participation age of ERISA-covered defined contribution (DC) plans to 18 under certain circumstances, providing access to retirement savings plans for eligible workers in this age range who currently don’t have access to their employers’ plans.
This legislation also removes costly provisions that would otherwise make covering younger workers expensive. Specifically, the bill delays ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the 21 to start contributing to their pension. The legislation also exempts 18 to 20-year-old employees from testing related to retirement funds that would otherwise increase the cost of administering retirement plans for these employees.
“This measure will not only help younger workers get into the habit of contributing to their retirement savings, but it will also provide additional years for their savings to grow to ensure a more secure financial future,” said Paul Richman, Chief Government and Political Affairs Officer at the Insured Retirement Institute.
Related: House introduces new 401(k) bill to help workers under 21 start saving for retirement
In a letter sent to Senators Cassidy and Kaine, Kourtney Gibson, CEO, Retirement Solutions, TIAA said, “By lowering the age at which an individual can access their workplace retirement plan from 21 to 18, the Helping Young Americans Save for Retirement Act helps workers start saving earlier … TIAA recently launched the Retirement Bill of Rights to bring attention to the retirement challenges that Americans face and help identify policies critical to improving retirement outcomes for all Americans. This bill supports this effort by ensuring more Americans have access to retirement savings once they turn 18, setting a solid foundation for success and potentially increasing their lifelong financial security.”
The Helping Young Americans Save for Retirement Act is also supported by BPC Action, Edward Jones, the American Benefits Council, LPL, the National Rural Electric Cooperative Association and Transamerica.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
