Federal Auto-IRA Bill for Uncovered Workers Reintroduced in House

Representative Richard Neal, D-Massachusetts, reintroduced legislation on Monday that would require employers with at least 10 employees to automatically enroll their employees into individual retirement accounts, if they do not offer another type of retirement plan.

Neal, the ranking member of the House Committee on Ways and Means, said in a statement that the bill would create a retirement savings option for gig workers and other independent contractors who do not have access to defined contribution retirement accounts.

“Automatic IRAs are simple and effective, and they have proven to be a successful tool to unlock secure retirements for more workers,” Neal said. “Across the country, many state automatic IRAs are demonstrating that they work not only in increasing savings rates but also to help close racial, gender, and income savings gaps.”

The bill has been introduced in both houses of Congress on several occasions, most recently by Neal in February 2024, but it did not advance out of committee.

According to the bill’s summary, the measure would impose little to no cost on smaller employers, since those required by this bill to offer retirement plans or automatic IRAs would qualify for either the existing startup tax credit or the bill’s proposed $500 automatic IRA tax credit for three years for employers with between 10 and 100 employees.

The legislation exempts companies with 10 or fewer workers; those already offering a qualified retirement plan; those in business for less than two years; and those offering governmental plans or church plans. Importantly, it does not affect workers currently enrolled in a state-sponsored plan.

The minimum default contribution for the first year is 6%, but companies can elect a rate as high as 10% in the first year and 15% after that. For those defaulted at 6%, the rate then automatically escalates by 1 percentage point each year for five years, capped at 10%. Employees can raise or lower their contributions or can opt out of the plan if they wish.

The bill requires the default investment option to be a target-date fund. In addition, the plan must offer a principal preservation fund and a balanced fund, along with any other investment options that the Department of the Treasury may designate.

The bill would also establish a lifetime income requirement for all defined contribution retirement plans that include at least 100 participants. These plans must allow participants to elect to receive at least 50% of their vested account balance as lifetime income, unless their account balance is less than $200,000.

If passed, the legislation would apply to plan years beginning in 2027. The bill was referred to the House Ways and Means Committee.

According to Pew research, as of August 2025, more than 1 million workers have saved more than $2 billion in state auto-IRA programs.

CalSavers, the largest program and first of its kind, had more than $1.4 billion in total assets, with 163,107 employers registered, as of August, according to the CalSavers “Retirement Savings Program Participation & Funding Snapshot.”

“Your transformative legislation would automatically create federal IRAs for workers without other access to retirement plans—the first, essential step to securing every worker’s right to a secure, dignified retirement,” wrote Thasunda Brown Duckett, president and CEO of TIAA, in a letter of support to Neal. “It builds on proven policy solutions: 20 states have enacted state facilitated retirement programs for private-sector employees. A federal program would help ensure workers’ pathway to retirement security no longer depends on their employer or state.”