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People need to save for retirement now more than ever. President Obama’s proposed legislation will require employers that do not currently offer a retirement savings plan to automatically enroll their employees into a Roth IRA.
Employees would be enrolled at a default rate of 3% of compensation to a maximum of $5,000 per year. Auto-enrolled employees would have the option of ceasing participation, switching to a traditional IRA, or changing contributions from the default rate. Companies that have been in business for more than two years and that employ more than 10 workers will be required to participate in the Auto IRA program.
The proposed bill would help fill the gap for the almost 80 million Americans who do not have a retirement plan through their work. The bill has also garnered bipartisan support in part because it would offer tax credits to employers in exchange for setting up an auto-IRA.

Small business owners are concerned about the cost of putting a retirement plan in place for their employees. There are options out there for small business owners,
consider the Simplified Matching Plan for Employees (Simple IRA) or the SEP. Both are inexpensive and easy to establish and maintain and neither of them requires annual reporting of enrollment information, investment options and performance to the IRS. Simple IRAs let both the business owner and employees defer as much as $11,500 of their annual salaries in 2010 (those 50 and older can put aside an additional $2,500). Employers also either make a dollar-for-dollar match of the employee’s contribution, up to 3% of his or her annual compensation, or contribute a straight 2% of the employee’s annual compensation regardless of the employee’s participation in the plan (to a maximum of $245,000 in 2010). Unlike with some other plans, “employees pay their own administrative fees with Simple IRAs and SEP IRAs.

Unlike the “large players” the ones that are focused on large corporate accounts with large assets, NAFEP is dedicated and focused on catering to the small business world.