Retirement Savings for Americans Act of 2025
- Bill Number
- H.R. 2696
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Labor and Employment
- Status
- Introduced
- Latest Action
- 2025-04-07: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2026-05-20T08:07:52Z
AI-Generated Summary
Summary of H.R. 2696: Retirement Savings for Americans Act of 2025
Purpose
The legislation aims to create a national retirement savings program called the American Worker Retirement Plan to help working Americans build wealth and improve financial security in retirement. It targets individuals without access to employer-sponsored retirement plans, providing a government-backed savings option with automatic enrollment and a matching tax credit to encourage participation.
Key Provisions
- Establishment of the Fund: Creates the American Worker Retirement Fund in the U.S. Treasury as a trust for contributions, investments, and distributions. The fund is self-sustaining, with administrative costs covered by its earnings.
- Eligibility and Enrollment:
- Applies to "qualifying workers," defined as employees of businesses without existing retirement plans (or ineligible for them) and self-employed independent contractors without personal retirement plans featuring automatic payroll deductions.
- Features automatic enrollment at 3% of compensation (via payroll withholding where possible), with an opt-out option. Employers must enroll eligible workers within one year of the fund's launch, facing penalties (2-10% of missed contributions) for non-compliance.
- Independent contractors can be enrolled by contracting businesses but remain classified as contractors.
- Contributions:
- Participants can contribute up to their compensation (treated as after-tax Roth-style contributions, not deductible but growing tax-free).
- Includes catch-up contributions for those over age 50 and options to contribute tax refunds.
- Provides a Government Match Tax Credit (new IRC Section 25F): Up to 5% of gross income, with 100% match on first 3% of income contributed, 50% on next 2%, phasing out for higher earners based on median U.S. income (e.g., full phaseout at 200% of median for joint filers). Credits are deposited directly into accounts; early withdrawals (within 6 months) forfeit the match.
- Investments and Accounts:
- Managed like the federal Thrift Savings Plan, with default age-based life-cycle funds (target-date portfolios shifting to safer assets over time).
- Options include government bonds, fixed-income funds, stock index funds (U.S. large-cap, small-cap, international), and potentially others.
- Participants can change investments twice yearly; quarterly reports include personalized retirement projections.
- Accounts are individual, nonforfeitable, and protected from creditors (except for child support, alimony, or taxes).
- Distributions:
- Available upon leaving qualifying worker status (e.g., job change or plan eligibility elsewhere).
- Options: Annuities, lump sums, installments, rollovers to other plans, loans (up to account balance, with spousal consent), hardship withdrawals (after age 59½ or for needs), and automatic distributions for low-balance or high-income accounts.
- Survivor benefits allow spouses to maintain accounts; early distributions taxed like Roth IRAs.
- Governance:
- Establishes a five-member American Worker Retirement Investment Board (Senate-confirmed, non-federal employees with investment expertise) to set policies and oversee investments.
- Appoints an Executive Director to manage operations; creates a seven-member Advisory Council for input on investments and administration.
- Emphasizes fiduciary duties (act solely for participants' benefit, diversify investments, avoid conflicts), with bonding, audits, and penalties modeled on the Employee Retirement Income Security Act (ERISA).
- Relationship to Other Benefits: Supplements Social Security; fund assets ignored for federal public assistance eligibility under age 65.
Significant Changes to Existing Law
- Introduces a mandatory national auto-enrollment retirement system outside traditional employer plans, filling a gap for the estimated 50-60 million uncovered workers.
- Adds IRC Section 25F for the Government Match Tax Credit, a new refundable credit deposited directly into accounts (not reducing taxes owed), distinct from the existing Saver's Credit (IRC Section 25B).
- Applies Thrift Savings Plan rules (e.g., investment options, spousal protections) to a broader civilian population, with Roth-like tax treatment (no upfront deduction but tax-free qualified withdrawals).
- Imposes employer penalties for non-enrollment, unlike voluntary systems; excludes fund assets from means-tested benefits, altering eligibility calculations.
Potential Impacts
- On Citizens: Could boost retirement savings for low- and middle-income workers (especially gig economy participants), potentially reducing reliance on public programs in old age. Automatic features may increase participation rates, but opt-outs and penalties could add administrative burdens.
- On Government Agencies: Treasury handles tax credits and withholding integration; new Board and Executive Director require setup costs (from fund earnings). Labor Department oversees fiduciary compliance and audits. Increases tax expenditures via credits (estimated billions annually).
- On International Relations: No direct impact; focuses on domestic savings.
- Broader Economy: May encourage long-term investment in U.S. markets, supporting economic stability, but could strain small businesses with compliance.
Main Stakeholders Affected
- Qualifying Workers: Primary beneficiaries—employees and independent contractors without retirement plans—who gain easy access to low-cost savings with government matches.
- Employers and Businesses: "Participating employers" (those with qualifying workers) must handle enrollment and remittances, facing penalties for failures; small businesses gain a simple alternative to sponsoring plans.
- Government Entities: Treasury (credits and deposits), Labor Department (fiduciary oversight), and the new Board/Executive Director (administration).
- Financial Sector: Asset managers selected to invest fund assets (limited to $500 billion or 10% each); insurers for fiduciary coverage.
- Families: Spouses and survivors protected via consent requirements and inheritance rights.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens fiduciary standards (borrowing from ERISA and Thrift Savings Plan) with personal liability, civil penalties (up to 100% of prohibited transactions), and subpoena powers; voids exculpatory clauses. Ensures portability and protections against alienation, but allows limited offsets for support obligations.
- Constitutional: Federal creation of a retirement fund raises questions on interstate commerce authority (justified by businesses in commerce); non-appropriation of funds and participant ownership align with property rights, avoiding Takings Clause issues.
- Political: Bipartisan sponsorship signals broad appeal to address retirement insecurity; mandates could spark debates on government overreach vs. individual choice, with phaseouts targeting lower incomes to minimize regressive effects. Implementation timeline (effective 2025) allows for regulatory adjustments but requires quick setup.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (9)
Rep. Sewell, Terri A. [D-AL-7], Rep. Malliotakis, Nicole [R-NY-11], Rep. Tenney, Claudia [R-NY-24], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Miller, Carol D. [R-WV-1], Rep. Smith, Adrian [R-NE-3], Rep. Swalwell, Eric [D-CA-14], Rep. Carey, Mike [R-OH-15], Rep. Edwards, Chuck [R-NC-11]
Recent Actions
- 2025-04-07: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-04-07: Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-04-07: Introduced in House
- 2025-04-07: Introduced in House
Bill Versions
- Retirement Savings for Americans Act of 2025 — issued 2025-04-07 — PDF (75 pages)