Gov. Jay Inslee of Washington signed a bill Thursday that will facilitate access to automatic enrollment individual retirement accounts for workers in the state’s private sector who otherwise lack access to employer-based retirement plans.
Adoption of the legislation, known as SB 6069, adds Washington to the growing pool of states that require at least some employers to provide access to tax-advantaged workplace retirement savings for both full- and part-time workers.
Washington’s “auto-IRA” strategy, based on the language in the legislation, follows in the recent footsteps of states such as Minnesota and Nevada. Rather than requiring employers to create traditional 401(k) plans or pensions, the state will create a central Washington Saves program, to which employees can make payroll contributions.
Washington’s program, like those in many states, includes features to help participants invest in diversified retirement portfolios.
Under the text of the legislation, the default contribution rate is to be “not less than 3%, nor more than 7%, of wages.” The program also includes 1% annual automatic escalation to a cap of 10% of wages, and the accounts are portable.
