Congress always has proposed legislation that will never make it to law and this thrift savings plan idea is one that is just an awful idea.
Senator John Hickenlooper (D-Colo.), a sponsor of a controversial bill to create a Thrift Savings-like plan for private sector workers, said he’d reduce 401(k) savings to pay for the legislation.
Hickenlooper has proposed the Retirement Savings for Americans Act (RSAA) and he said that he would lower 401(k) tax incentives and contribution limits to pay for the program.
Supporters of RSAA say it would help low- and middle-income Americans build wealth and save for retirement. RSAA would require the federal government to pay matching contributions for workers, but only those who participate in the plan.
The proposed 5% match under RSAA would encourage plan sponsors to terminate their 401(k) in favor of the federal plan. Plus based on Social Security, the Federal government doesn’t have a great scorecard for retirement savings.
