Obama unveils new ways to boost retirement savings

McClatchy NewspapersSeptember 5, 2009 

WASHINGTON — President Barack Obama on Saturday announced new policies to help Americans save more for retirement.

In his regular Saturday radio address, Obama said Americans have been hit by a one-two punch of low savings for their retirements, then huge losses for those who did save, as their home values and 401(k) holdings lost value.

"This recession has not only led to the loss of jobs, but also the loss of savings," Obama said in remarks released in advance of his 10 a.m. Saturday show. "Over the past two years, the American people have lost about $2 trillion in retirement savings."

Even before the stock markets crashed and home values plummeted, he said, Americans were saving too little.

"We cannot continue on this course," he said. "This country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement. That is why we are announcing several common-sense changes that will help families put away money for the future."

The new options sponsored by the Treasury Department and the Internal Revenue Service will:

_ Make it easier for more businesses to automatically enroll their employees in 401(k) retirement accounts and SIMPLE-IRA accounts.

Automatically enrolling people in 401(k) plans — while still giving employees the right to opt out or change amounts — would boost participation from about 70 percent to more than 90 percent, according to the White House. It's "particularly effective" at increasing savings by minorities and the poor.

The new plan will streamline IRS approval to boost participation by small and medium-sized businesses, which lag behind larger companies at setting up automatic enrollment.

_ Make it easier to save federal tax refunds.

More than 100 million American families get tax refunds each year, averaging more than $2,000 each.

They already have the option to have that money deposited directly to their bank accounts or to earmark some of it for an IRA. Now, starting in 2010, people will have the option of using the refunds to buy U.S. Savings Bonds. Starting in 2011, taxpayers will be able to buy bonds in the names of other people such as children and grandchildren.

_ Let workers convert unused vacation and leave time to 401(k) accounts.

Millions of workers who leave their jobs each year receive payments for unused leave time, according to the Treasury Department. The IRS was to issue two rulings Saturday designed to show businesses how they can give employees the option of contributing those settlements to 401(k) accounts.

_ Make clearer to workers their tax-saving options when they change jobs.

The Treasury Department and the IRS Saturday were to issue what they called a "Plain-English road map" of the often-confusing options that people have when they change jobs and receive a lot of money from their old retirement account.

ON THE WEB

The new rulings and materials from the Treasury and the IRS

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McClatchy Newspapers 2009

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