Senator Bill Cassidy (R-LA), the Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, and Senator Tim Kaine (D-VA), a member of that committee, introduced the Helping Young Americans Save for Retirement Act.
Sponsors of 401(k) plans would have to permit employees as young as 18 to make contributions under the bill. However, their involvement would be restricted to the following:
Not relevant to employees who work part-time: The long-term part-time regulation would not take effect until age 21, and it permits an employee to participate if they had two years of part-time service totaling at least 500 hours annually. The idea would prohibit certain individuals from participating, such as college summer interns who are younger than 21.
Nondiscrimination and rules prohibiting heavy lifting: These participants under the age of 21 may be excluded by their employers or sponsors from nondiscrimination testing, such as 401(k) ADP and ACP testing, and from consideration under the Top-Heavy rules.
Not taken into account when calculating the audit requirement under the 5500 rules: Plans sponsors with 100 or more members are required to file audited financials together with Form 5500/annual report. Employees who participate just because the bill proposes under-21 participation would not be considered for the purposes of that provision until five years after they initially join the plan.
These changes would be effective beginning in 2026.
While this proposal is unlikely to be passed as a standalone bill, it is likely to be under consideration in the next round of broad-based, bi-partisan retirement policy legislation.
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