Gig Worker Retirement Bill Allows Freelancers to Join Employer Plans, Sets Up Automatic Savings Pilot Programs

The Independent Retirement Fairness Act is a big deal for anyone working the gig economy, freelancing, or running a small contracting business. Simply put, this bill creates new avenues for independent workers—defined as those paid for work but not legally considered an employee—to access retirement savings plans usually reserved for traditional W-2 employees. It does this primarily by changing federal retirement law (ERISA) and the tax code to allow these workers to join established Pooled Employer Plans (PEPs) and Simplified Employee Pensions (SEPs).

The Solo Hustle Gets a 401(k) Option

For years, independent contractors had limited, often expensive, retirement options. Section 2 and 3 of this Act change that by allowing freelancers to be treated as if they were employees, but only for the purpose of joining a retirement plan. This is the key: If you’re a freelance web designer working for a firm that offers a PEP, you could potentially enroll in that plan, even though you’re not an employee for tax or labor law purposes. The bill explicitly states that joining the retirement plan doesn't suddenly make you an employee under any other federal, state, or local law. This clarity is crucial for both contractors and the companies hiring them, keeping the legal separation intact while closing the retirement gap.

This also opens the door for trade associations (including labor unions and worker cooperatives) to sponsor these large pooled plans for their members—which is a huge administrative win. Instead of every independent worker managing their own complicated Solo 401(k), they can access a large, professionally managed plan, often with lower fees and better investment options. Think of it as getting access to the big-company retirement benefits without having to give up your independence.

Making Savings Automatic and Painless

Perhaps the most interesting feature for the everyday gig worker is found in Section 6, which mandates new pilot programs run by the Treasury and Labor Departments. These programs are designed to make saving automatic, addressing the difficulty freelancers face when income is irregular. They introduce two key savings mechanisms:

1. Round-Up Savings: You can elect to have your payment rounded down to the nearest dollar, with the spare change automatically deposited into a retirement savings account. For example, if your client pays you $150.75, 75 cents goes straight into savings. It’s a way to save without feeling the pinch.
2. Scheduled Deductions: You can set up automatic deductions from your paychecks at regular intervals—monthly, quarterly, or even per payday—to go toward your retirement fund. This simulates the automatic payroll deduction W-2 employees rely on.

Both options can feed into a pooled plan, a Solo 401(k), or a new mechanism called a Suspension Account. This account acts as a temporary holding spot for contributions. Money can sit there until you move it to your official retirement account or, if you don't move it by the end of the tax year, it must be paid back to you as cash. This gives flexibility but also requires the worker to be proactive about transferring the funds before the year-end deadline.

Less Red Tape Means Better Plans

For the companies and financial institutions running these pooled plans, Sections 4 and 5 simplify the complex audit requirements. Currently, auditing a large pooled plan can be a huge administrative headache. This bill streamlines the process, stating that the audit opinion only needs to cover the specific parts of the plan related to one participating employer, rather than requiring a massive, all-encompassing audit. This reduction in administrative burden should make it cheaper and easier for providers to offer these retirement plans, which ultimately benefits the independent workers who enroll in them.