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Nevada Next State to (Possibly) Offer an Auto IRA

State Auto-IRA Plans

Update: This article now includes comments from the American Retirement Association CEO Brian Graff to the Nevada Senate Government Affairs Committee in support of the bill. 

Nevada lawmakers are again proposing a state-supported retirement plan for private-sector workers who lack coverage.

The bill, SB305, introduced by Senate Chief Majority Whip Dallas Harris (D-Las Vegas) on March 16, would establish the Nevada Employee Savings Trust.

“It’s my opinion that if we don’t get people to start saving, our social programs are going to be in trouble in 30 years and 40 years,” Harris said during a hearing on April 5. “This program costs nothing to the state, it costs nothing to businesses, and it’s completely run on participant fees.”

Now before the Senate Committee on Government Affairs, it would require employers to automatically enroll all covered employees and withhold their payroll-deducted contributions. It would also require employers to distribute informational materials, disclosure statements, forms, and instructions concerning the program to covered employers.

Workers could change the rate at which they withhold contributions from their compensation and withdraw up to $1,000 to meet a financial emergency or another kind of emergency. 

They could also opt out of participating in the plan if they choose to do so. 

“We’re excited to see this important legislation introduced in Nevada to close the coverage gap,” Andrew Remo, American Retirement Association (ARA) Director of Federal and State Legislative Affairs, said. “We plan to engage with the sponsor and other interest lawmakers to let them know that the private sector fully supports this initiative.”

The bill would also create a Board of Trustees of the Nevada Employee Savings Trust to design, establish, and operate the Nevada Employee Savings Trust Program and adopt regulations, rules, and procedures for the establishment and operation of the program. 

The board would appoint a trustee and prepare informational materials, disclosure statements, forms, and instructions concerning the program for distribution by covered employers to covered employees.

The State Treasurer would provide staff and administrative support to the board.

"The ARA believes that Senate Bill No. 305 strikes the proper balance to close the retirement plan coverage gap in the private sector workforce to the greatest extent possible while imposing the minimum possible burden on Nevada’s employers," ARA CEO Brian Graff wrote in a letter Wednesdsay to the Nevada Senate Government Affairs Committee in support of the bill. 

He added that because the bill requires all private sector employers with an electronic payroll system in the state to offer a retirement plan to their employees, ensures that any type of retirement plan, such as a 401(k) plan, satisfies the requirement and creates a state-facilitated IRA-based retirement program exempt from ERISA, it will not force the state to compete with existing retirement plan products.

One of a Growing Number

If passed, Nevada would be the twelfth state to either enact such a program or pass legislation to do so. 

The Nevada Independent reports that bill supporters say, “the state is facing a ticking time bomb with an estimated 50 percent of Nevadans in the private sector (593,000 people) working for businesses that do not offer a retirement plan, which will down the road likely put immense pressure on social service programs such as Social Security or food stamps.”

Yet Neal Waters with the Nevada Chapter of the National Association of Insurance and Financial

Advisors (NAIFA-NV) opposed the bill, noting in written comments to lawmakers that SECURE 2.0 recently passed, which expanded options for Americans to plan and save for retirement, rendering state plans unnecessary.

“While well-intentioned, we do not believe this proposal provides a meaningful step toward solving the retirement savings gap,” Waters wrote, claiming similar plans in California, Oregon, Illinois, and Connecticut are costly and are falling short of promises. “Secure Choice style state-facilitated retirement programs do not address the foundational reasons Americans are not saving more for retirement.”