Michigan's Granholm Announces new 401(k) Plan Proposal

January 26, 2006 (PLANSPONSOR.com) - The state of Michigan plans to open a new 401(k) retirement savings program for employees of small companies that do not offer a retirement benefit.

In her State of the State speech this week, Governor Jennifer Granholm announced her administration’s intention to launch such a state-administered program by the end of 2006 after consulting with the Internal Revenue Service (IRS) about the details, Crain’s Detroit.com reported. Among those details: the size of employers allowed to get involved in the plan and whether any of the program would force Granholm to come back to lawmakers for specific approval.

Granholm did not specify how many Michigan employers or employees she sees participating in the plan.

State Treasurer Jay Rising said the state’s role would alleviate the administrative costs, requirements and ongoing duties that often make it difficult for small businesses to set up pension plans. Participants would have a range of investment options, including mutual funds, Rising said.

“Finally, many of you listening tonight who work for small businesses do not have a pension plan,” Granholm said in the speech. “My administration will design and open a 401(k) plan, like the state’s plan, for those workers of small companies who don’t offer a pension plan. At minimal expense to state government, we will help tens of thousands of Michigan workers save for their retirement and achieve economic security. I f those in this room can have a pension plan, thanks to the citizens, certainly those same citizens who are watching tonight ought to be able to have one, too.”