New National Retirement Plan Automatically Enrolls Workers Without 401(k)s, Adds Government Match

This legislation creates the American Worker Retirement Fund—a massive, new, government-managed savings vehicle designed to catch the estimated 57 million workers who currently lack access to a retirement plan through their job. The core idea is simple: if your employer doesn't offer a 401(k) or similar plan, you’re automatically enrolled in this new Fund. This new system, set to launch in 2025, requires automatic contributions of 3% of your pay, which you can opt out of. Crucially, the bill establishes a Government Match Tax Credit (Section 301) where the Treasury deposits matching funds directly into your account, providing a significant incentive for lower and middle-income savers.

The Automatic Enrollment Safety Net

For the average worker, the biggest change here is the shift from having to seek out retirement savings to being automatically included. If you’re a qualifying worker—meaning you don’t have access to an existing employer-sponsored plan—your employer must automatically enroll you (Section 104). Think of the barista, the gig worker, or the employee at a small landscaping company: they now get a retirement account without having to fill out piles of paperwork. If an employer fails to enroll a worker or drops the ball on depositing contributions, they face penalties ranging from 2% to 10% of the missed deposit, plus they have to cover any lost earnings (Section 104).

Free Money: The Government Match

The real game-changer is the Government Match Tax Credit (Section 301). This isn't just a tax deduction; it’s money the Treasury deposits directly into your retirement account. The match works on a sliding scale based on your income and contributions, matching 100% of your contributions up to 3% of your gross income, and then 50% for contributions between 3% and 5%. For example, if you make $50,000 and contribute 5%, the government is kicking in a significant chunk of change to jumpstart your savings. This credit is treated as an overpayment on your taxes and is sent straight to your Fund account, ensuring it’s immediately invested.

Your Savings Won't Cost You Benefits

For those who worry that saving money will disqualify them from federal aid programs, the bill offers a major protection (Section 4). If you are under 65, the money you save in this new American Worker Retirement Fund—including the government match—will not be counted against you when determining eligibility for federal public assistance benefits. This is a huge policy move that removes a primary barrier for low-wage workers who often fear that saving for the future means losing crucial support today.

Strict Management and Investment Choices

The Fund is run by a new entity, the American Worker Retirement Investment Board, which operates under strict fiduciary duties (Section 206), meaning they must act solely in the best interest of the participants. The Board must offer a range of investment choices, including conservative Government Securities Funds, Fixed-Income Funds, and various Stock Index Funds. If you don't pick an option, your money is automatically invested in an age-appropriate Life-Cycle Fund (Section 102), which automatically adjusts risk as you get closer to retirement. This structure mirrors the federal Thrift Savings Plan (TSP), giving participants professional management and diverse, low-cost investment options.

The Fine Print: What to Watch Out For

While the benefits are clear, there are a few important details to note. First, if you withdraw the contributions that generated the government match within six months, you forfeit that matching portion, which goes back to the Treasury (Section 301(h)). This is designed to discourage using the account as a short-term savings vehicle. Second, the new Board and Executive Director are granted significant authority to write the rules (Section 203), which means the specifics of implementation—like how quickly the match is deposited or the exact contribution rates—will be determined by people who are not elected officials. Finally, employers must now navigate the automatic enrollment process, and while the penalties are clear, the administrative burden of tracking who is eligible and ensuring timely deposits is a new compliance requirement for small businesses.