Senator Clinton Proposes Government Help for Retirement Savings

On Tuesday, Senator Hillary Rodham Clinton (D-New York) proposed legislation that would ensure a dollar-for-dollar government match on the first $1,000 in employee 401(k) contributions and would offer a new retirement savings vehicle for individuals not covered by 401(k) plans.

According to a statement, the match would only apply to 401(k) plan participants earning up to $60,000; however, for those earning between $60,000 to $100,000, the government would give a 50% tax credit for the first $1,000 contributed by employees.

The proposal was made while on a campaign stop in Iowa. Clinton, a presidential hopeful, also proposed a retirement savings vehicle for individuals not covered by 401(k) plans. With the so-called American Retirement Accounts, which would allow a pretax contribution of up to $5,000 per year, individuals would get the same proposed government matches as those with 401(k) accounts. For these accounts, however, individuals would be able choose their own retirement plan provider.

The American Retirement accounts would provide “universal access to a generous 401(k) for all Americans,” and help the individuals “who are currently falling through the cracks of our system, while reducing wealth inequality, increasing national savings, and encouraging economic growth. And they will ensure all Americans can save and build wealth for their retirement,” according to the statement.

The American Retirement Accounts would allow individuals to make withdrawals for such expenses as a down payment on a home or for education expenses. Withdrawals of up to 15% of account balances would also be allowed during periods of extended unemployment – with no penalty.