Saving for the Future Act
- Bill Number
- H.R. 5887
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Labor and Employment
- Status
- Introduced
- Latest Action
- 2025-10-31: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, 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
- 2025-11-21T12:17:40Z
AI-Generated Summary
Purpose of the Legislation
The "Saving for the Future Act" (H.R. 5887) aims to create a nationwide system for personal retirement and savings to help more American workers build financial security for retirement. It addresses gaps in retirement access by requiring certain employers to contribute to savings plans and offering tax incentives to encourage participation. The bill also raises some income tax rates to fund these initiatives.
Key Provisions
- Employer Requirements: Employers with at least 10 full-time equivalent employees (FTEs) for two or more years must contribute a minimum amount to retirement plans for employees not covered by a traditional pension. Contributions start at $0.50 per hour worked in the first two years, rise to $0.60 per hour in years three and four, and then adjust every three years based on average wage growth. Non-compliant employers must pay back contributions plus interest.
- Qualifying Retirement Plans: Employers must offer plans like 401(k)s, defined benefit pensions (traditional plans promising fixed payouts), or simpler options such as individual retirement accounts (IRAs) or state-facilitated programs. For smaller employers (under 100 FTEs), options include automatic payroll deduction IRAs or new "UP Accounts" (Universal Personal Savings Accounts).
- UP Accounts System:
- UP Retirement Accounts: Portable, individual defined contribution accounts (where savings grow based on contributions and investments). Employees are automatically enrolled with 4% of wages deducted, escalating to 10% unless opted out. Employers can add extra contributions up to half the annual IRA limit. Accounts allow rollovers from other plans and offer low-fee, diversified investments with a default option that reduces risk near retirement.
- UP Savings Accounts: Optional short-term savings add-on with a cap starting at $2,500 (increasing with wages). Funds are invested safely (e.g., in cash or government bonds) and can be withdrawn penalty-free for hardships like medical bills or home down payments.
- Oversight and Funding: Creates the independent Federal Universal Personal Savings Investment Board (five presidentially appointed members with financial expertise) to manage UP Accounts. A UP Account Fund in the U.S. Treasury holds contributions, earnings, and pays benefits/administrative costs from net earnings.
- Distributions and Protections: Accounts provide options like lifetime monthly payments, fixed-term annuities (insurance products for steady income), or regular withdrawals. Survivor benefits apply upon death. Quarterly statements show projected retirement income and fees.
- Tax Incentives:
- Increases small employer pension startup credit from $500 to $2,000 per year and expands eligibility to employers with up to 250 employees.
- New credit for minimum employer contributions: 50% for employers with 15 or fewer FTEs, 25% for 16–30 FTEs (offsets costs for compliant small businesses; unavailable for non-compliers).
- New individual credit: 50% of contributions to IRAs or UP Accounts up to a base amount tied to employer minimums, for workers without employer plans or the unemployed.
- Tax Rate Increases: Raises the top individual income tax rate from 37% to 39.6% and the corporate rate from 21% to 23%, effective for tax years after December 31, 2024. Revenues help offset costs, with transfers to Social Security trust funds.
Significant Changes to Existing Law
- ERISA Amendments: Adds a new Part 8 to the Employee Retirement Income Security Act of 1974 (ERISA, the main federal law governing workplace retirement plans), introducing UP Accounts as a federal backstop for employers without plans. Exempts UP Accounts from some nondiscrimination rules (which prevent plans favoring highly paid workers) but applies fiduciary standards (duty to act in participants' best interests).
- Tax Code Changes: Introduces sections 45BB (employer credit) and 25BB (individual credit) to the Internal Revenue Code. Treats UP Accounts like tax-exempt 401(a) trusts for contributions and distributions, with Roth (after-tax) options allowed. Increases startup credit under section 45E and adjusts tax rates in sections 1 and 11.
- Other: Applies federal survivor annuity rules (from the Thrift Savings Plan for government workers) to UP Accounts. Clarifies that employer duties are limited to timely payments, with the Board as primary fiduciary.
Potential Impacts
- On Citizens: Improves retirement access for about 3 in 10 workers without plans, potentially reducing poverty in old age (e.g., 48% of households over 55 currently lack savings). Auto-enrollment and credits could boost savings confidence, especially for low-wage or part-time workers, but may reduce take-home pay initially.
- On Government Agencies: Establishes a new independent board under the Department of Labor (via ERISA), increasing administrative workload for oversight, rulemaking, and contracting with private firms (no single firm handles over $500 billion in assets). Treasury manages the UP Fund; tax changes add revenue but require IRS updates for credits and rates.
- On Employers: Mandates contributions for mid-sized firms (burden offset by credits), with notices required for very small employers (under 10 workers) on how to set up personal accounts. Larger firms may see minimal change if already offering plans.
- On International Relations: No direct impact; focuses on domestic savings and taxes.
Main Stakeholders Affected
- Workers and Retirees: Primary beneficiaries, especially non-retirees (28% lack savings) and older households without pensions; includes part-time, gig, or small-firm employees.
- Employers: Applicable employers (10+ FTEs) face new costs/duties; small businesses gain credits but must comply or face penalties. Very small firms (under 10) provide notices only.
- Financial Institutions: Private firms contracted to administer accounts and investments, with opportunities in low-fee funds but limits on market share.
- Government Entities: Department of Labor (ERISA enforcement), Treasury/IRS (fund/tax administration), and Social Security (revenue transfers).
- Taxpayers: Higher rates affect high-income individuals and corporations, funding the program indirectly.
Notable Legal, Constitutional, or Political Implications
- Legal: Expands ERISA's scope to mandate employer involvement in savings, potentially leading to lawsuits over compliance, fiduciary breaches, or hardship withdrawal rules (modeled on 401(k) hardships, which allow early access without full penalties). Tax exemptions for UP Accounts simplify administration but bypass some anti-discrimination tests, raising equity concerns.
- Constitutional: Creates an independent agency with Senate-confirmed appointees (staggered terms up to 10 years), aligning with executive branch norms but requiring presidential involvement. No apparent free speech or property rights issues, though mandates could be challenged as burdens on interstate commerce.
- Political: Promotes universal coverage to address retirement insecurity (citing Federal Reserve and GAO data), but employer mandates and tax hikes may spark debate over government overreach, business costs, and fiscal policy. Credits aim to ease adoption for small firms, potentially gaining bipartisan support in worker-focused reforms.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Peters, Scott H. [D-CA-50]
Cosponsors (1)
Rep. Torres, Norma J. [D-CA-35]
Recent Actions
- 2025-10-31: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, 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.
- 2025-10-31: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, 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.
- 2025-10-31: Introduced in House
- 2025-10-31: Introduced in House
Bill Versions
- Saving for the Future Act — issued 2025-10-31 — PDF (30 pages)