House Bill 2174 which would create a state administered (IRA) retirement savings program for workers who don’t have a retirement account through their employer, has cleared the Senate Finance Committee despite opposition from business groups that claim the state-sponsored program would be burdensome and unfair.
The legislation would require private employers to offer their employees the option of contributing to an individual retirement account through a program administered by Virginia529, which runs the 25-year-old college savings plan program for families. An IRA account is different from a 401 (k) style retirement savings plan and would not allow employers to contribute as a benefit.
The requirement would apply initially to businesses with at least 25 employees, which the committee raised from the original threshold of five employees though an amendment.
The amendment also requires the Virginia529 program to report to the General Assembly next year on how it would extend the program eventually to smaller businesses.
Eligible businesses would have to offer the option but would not contribute to an employee’s IRA account. Employees could opt-out of the program, control how much they contribute monthly and carry their IRA with them if they changed jobs.
The Program will be established, and enrollment will begin no later than July 1, 2023.
