MI 401(k) Plan Only Needs $100K to Start

February 13, 2005 (PLANSPONSOR.com) - A Michigan state official has told lawmakers that Governor Jennifer Granholm's recent proposal to start a state-run 401(k) plan for state residents without one would only need $100,000 to get started.

Treasurer Jay Rising told members of the state Senate Finance Committee that the money would be used to pay consultants and prepare documents for presentation to the Internal Revenue Service (IRS), the Detroit News reported. After the program is up and running, it would fund itself out of participants’ investments, the treasurer said.

As outlined on Granholm’s State of the State speech (See Michigan’s Granholm Announces new 401(k) Plan Proposal) the plan would be designed to offer tax-deferred savings opportunities to the tens of thousands of Michigan employees who work for small businesses that don’t provide a 401(k) option.

“Four in 10 employees currently are not saving for retirement,” Rising testified, according to the newspaper. “This plan is designed so people have access to provide responsibly for their own retirement.”

Senate Finance Committee Chairwoman Nancy Cassis said government should get involved only in providing services to individuals that they can’t provide themselves. This program doesn’t fit that description, she said. “This is another layer of government to provide something the private sector already does,” she said, the newspaper reported. “We keep creeping closer under this kind of philosophy to socialism.”