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Administration floats new retirement savings options

September 08, 2009

The Obama administration announced some new retirement savings initiatives for the coming tax season. Tax Analysts reports ($link) that the administration made the following initiatives to promote savings:

* provide guidance to make it easier for employers to automatically enroll and increase the contributions of their employees in section 401(k) plans and SIMPLE individual retirement accounts;

* provide an easy way for taxpayers to save their tax refund by making available an option for filers to automatically purchase U.S. savings bonds with their refund;

* provide guidance for employees on how to cash out and contribute unused vacation and other leave amounts to their 401(k) or similar plan to increase savings; and

* use the IRS Web site to provide more information to promote savings, including a road map for rollovers.

The savings bond proposal is the strangest item on the list. It almost looks like the government is desperate to hang onto the cash. (Update: "Obama to Let Taxpayers Convert Tax Refunds Into IOUs")

The guidance includes:

Rev. Rul. 2009-30, providing guidance for employers to implement automatic enrollment in 401(k) plans.

Notice 2009-65, with pre-approved plan language for 401(k) automatic enrollment,

Notice 2009-66, making automatic enrollment available for employers using SIMPLE IRA plans.

Rev. Rul. 2009-31, providing guidance on rolling paid time off amounts into 401(k) plans.

Press release announcing these initiatives.