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October 11, 2007
Hillary Clinton Announces Plan to Provide 'Universal Access' to 401(k)s

Presidential hopeful Senator Hillary Clinton announced a plan this week that would allow all Americans to open personal 401(k) retirement savings accounts. Her plan, the American Retirement Accounts Plan, provides for "universal access" to 401(k) accounts along with matching tax cuts from the federal government.

"My plan will help tens of millions of middle class families go from just getting by to getting ahead ­ putting them on a path to a secure retirement, " Clinton said in a press release announcing the plan.

Clinton's plan includes offering matching tax cuts of up to $500 and $1,000 "to help middle class families save" as follows--a dollar-for-dollar tax cut for the first $1,000 of savings by every married couple making up to $60,000, and a 50 percent match on the first $1,000 of savings for every couple making between $60,000 and $100,000. The matching tax credit will be available to all Americans in existing 401(k) type accounts as well as the new American Retirement Accounts, according to the press release.

The American Retirement Account plan "will build off the existing employer-based retirement savings system," according to the release. "Those who like their current retirement savings accounts can keep them --the only change is that they may be eligible for generous new matching tax credits." Middle class Americans who "want a new choice" will be allowed to open an American Retirement Account that will allow individuals to contribute up to $5,000 per year on a tax-deferred basis. The first $1,000 contributed into the accounts will be eligible for the new 100 percent and 50 percent government matches.

Clinton says the accounts would be the first "that provide a secure, diversified opportunity to get generous matching financial incentives for saving regardless of whether you are working for a firm that provides an employer match or traditional 401(k)" and would be "as easy, secure and generous as is offered by good employer-sponsored 401(k)s." The accounts "will be established without any new government bureaucracy, by creating competition in the private sector to provide plans that are both secure and marketable," according to the release.

Employers would also be encouraged to allow "no-hassle, direct deposit enrollment" into the new American Retirement Accounts under the plan.



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