Reps. Chu, Panetta, and Sewell Introduce Legislation to Encourage Retirement Savings
WASHINGTON, DC – Today, Reps. Judy Chu (CA-27), Jimmy Panetta (CA-20), and Terri Sewell (AL-07) introduced the Encourage Americans to Save Act (EASA). This bill would update the saver’s tax credit into a saver’s match – a federal matching contribution to middle and low income working Americans who contribute to a retirement savings account, whether they save at work through an employer-sponsored plan or on their own through an IRA. The bill would offer matching contributions for the first time to millions of individuals not covered by an employer-sponsored retirement plan, including those who save through an IRA under a state or local government program, such as CalSavers.
According to one survey this year, 46 million Americans depleted their emergency savings since the start of the pandemic. The saver’s match would both encourage saving and help middle and low income earners save for the future by providing an immediate, meaningful return on their personal contributions. The saver’s match will also allow more households to participate by updating the income limits to reflect our economic reality, and indexes the income levels to inflation so this credit will be valuable to Americans well into the future. The bill’s sponsors issued the following statements:
“This National Financial Literacy Month, we should recognize that millions of Americans are facing financial precariousness due to the pandemic,” said Rep. Chu. “46 million Americans depleted any emergency savings they had just to stay afloat, harming their ability to retire in the future. With so many tapping into retirement savings to pay for basic needs, we need to double-down on making it easier for families to prioritize saving for retirement. This bill will help provide more security to more families by putting more money directly into retirement accounts. The existing saver’s tax credit leaves out far too many middle and low income families who do not pay enough in taxes to qualify. But these are precisely who our tax system should be assisting. This new matching model not only encourages more retirement investments across the board, it puts this money directly into the taxpayer’s account, helping to build savings immediately. Furthermore, the IRS will be required to promote the Saver’s Credit in digital and print media, and in multiple non-English languages. Being able to retire with the security that you will not starve or lose your home should not be an option just for the wealthy. All Americans, regardless of background deserve a chance at retirement. This bill puts that reality in reach for more Americans than ever.”
“As this pandemic leaves lower and middle income Americans financially strained, we must ensure they have the necessary resources to fully take advantage of incentives in our tax code to help secure their retirements and financial futures,” said Rep. Panetta. “Our Encouraging Americans to Save Act would expand the Saver’s Tax Credit eligibility for those without tax liability and update the credit to include a federal savings match for retirement plan contributions. By improving this credit for those who need it most, Americans can get through this pandemic with their retirement savings stronger and more secure.”
“Low income workers in Alabama and across the country are especially vulnerable to financial instability and have fewer opportunities to build a secure retirement,” said Rep. Sewell. “Too often, those who need the most support do not benefit from existing retirement savings incentives. Through the creation of a saver’s match, the Encourage Americans to Save Act will give these workers an immediate return on their investment and ensure they can build a path toward a financially secure future.”