Michigan Bill Proposes State Auto-IRA Program

Michigan State Representative Mike McFall, a Democrat, has put forward Michigan House Bill 5461, MI Secure Retirement, which would create a state-facilitated automatic individual retirement account program, MI Secure Retirement, for the state’s workers who do not have access to employer-sponsored plans.

McFall introduced the bill on February 21. If passed, it would enable employees to save for retirement even in the absence of an employer-sponsored program. Almost 42% of Michigan’s private sector workforce aged 18 to 64 did not have access to workplace retirement savings plans, as of 2020, according to an announcement from the legislator.

“We continue to see an aging workforce that is not financially secure enough to retire,” McFall said in a statement. “This program will help small businesses retain employees, allow for more Michiganders to have additional financial autonomy in retirement, and save tax dollars because fewer people will need to take advantage of social safety net programs as they age.”

Automated savings programs, also known as “secure choice” or “work and save” programs, already exist in 15 states. These initiatives automatically enroll workers who do not have retirement benefits into individual retirement accounts, setting aside a portion of their wages per pay period. The programs are often administered by firms such as Vestwell, Ascensus and Ubiquity Retirement + Savings.

“We’re excited to see Michigan join the efforts of other states by introducing a new auto-IRA bill this week that has the possibility of impacting many individuals and businesses across the state,” says Douglas Magnolia, chief customer officer and president at Vestwell State Savings. “As states and their private-sector partners continue to show that these programs are an innovative solution that is accessible for employers, and simple for savers, we expect the interest among other states to continue. Closing the access gap will require innovation from the public and private sector, and state programs have shown they are a vital part of the overall solution.”

Participants would be able to determine their contribution amounts and opt out at their discretion. Additionally, they could access their savings without penalties in case of financial emergencies or setbacks, and they would be able to carry the IRA with them to different jobs. McFall stated that the program will come at no cost to employers.

In November 2023, the cumulative account assets in automated savings programs exceeded $1 billion across seven state initiatives. The states included, from largest asset size, are Oregon, Illinois, California, Connecticut, Maryland and Colorado, according to the Pew Research Center. The momentum behind these efforts has been steadily growing since the 2017 launch of with Oregon’s pilot program, OregonSaves, which helps private sector workers save for retirement.

“Millions of workers across the country—and 1.5 million in Michigan—are struggling to save enough for retirement simply because they lack access to workplace savings,” said John Scott, director of the Pew Charitable Trusts’ retirement savings project, in a statement. “MI Secure Retirement is an innovative and practical solution, with no costs for employers, to address the challenges workers face in preparing for retirement in this economy.”

The bill was referred to the Michigan House of Representatives’ Committee on Labor for review; it would need to pass both the house and the Michigan Senate to become law.