#auto ira

[crratbc]

Have State Auto-IRAs and Fintech Shifted Who Contributes to IRAs? – Center for Retirement Research

The brief’s key findings are:

IRAs were created to help those without an employer plan to save, but most IRA assets are simply rollovers from 401(k)s, not new contributions.

Recently, though, the share of households contributing to an IRA has ticked up – a little bit for low-income workers and a lot for those under 40.

The rise in low-income contributors could well be due to state auto-IRA initiatives, which have broadened access to workplace-based plans.

The surge in younger contributors is most likely due to new fintech platforms that promote IRAs to tech-savvy Millennials.

But these younger contributors tend to have a 401(k) too, so IRAs remain mainly a way for those with a plan to gain more tax-advantaged saving.

[squaredawayblog]

State Auto-IRA Savings Could Affect Medicaid Eligibility – Center for Retirement Research

The amounts workers accumulate in these IRAs over many years could exceed the asset cap on Medicaid coverage for retirees. One state has addressed this issue.

[crratbc]

Will Auto-IRA Programs Affect Medicaid Enrollment? – Center for Retirement Research

The brief’s key findings are:

State auto-IRA programs require employers without a retirement plan to auto-enroll their workers in an IRA.

As participants build up IRA assets, they may end up ineligible for means-tested Medicaid when they retire.

The analysis projects that today’s younger workers would end up with meaningful assets. 

But the effects on Medicaid may be muted, as older cohorts will have lower balances and some younger cohorts may “spend down” to get on Medicaid.

Alternatively, states could adapt their Medicaid asset tests to exclude all, or part of, auto-IRA savings – a step already taken by California.

[crratbc]

Will Auto-IRAs Help Households Cope with Emergency Expenses? – Center for Retirement Research

The brief’s key findings are:

State auto-IRA programs help workers build retirement savings, though participants can withdraw their contributions without taxes or penalties.

But a new CRR survey of low- to moderate-income workers shows that only 10 percent would tap such an account for an emergency.

Most workers prefer to keep the savings intact for retirement and have misperceptions about taxes and penalties.

Whether the withdrawal process is described as “hard” or “easy” had little effect on withdrawals.

But the “easy access” framing did make workers more enthused about auto-IRAs, which could help participation.

[squaredawayblog]

The state-sponsored IRA program has automatic enrollment and is reaching low-income workers, who frequently lack a retirement plan at work. 

[crratbc]

Over the past two decades, employers of all sizes have adopted 401(k)s with automatic enrollment - and many automatically increase their workers' contributions. 

[squaredawayblog]

Over the past two decades, employers of all sizes have adopted 401(k)s with automatic enrollment - and many automatically increase their workers' contributions. 

[squaredawayblog]

Workers who lack employer benefits can get health insurance through other avenues. Their options for retirement are limited.