Sponsors (4)
Official title: Establish the American Worker Retirement Plan, improve the financial security of working Americans by facilitating the accumulation of wealth, and for other purposes.
Introduced April 30, 2025 by John Wright Hickenlooper · Last progress April 30, 2025
The bill expands retirement access and incentives for workers—especially those without employer plans—through automatic enrollment, matching, and protective governance, at the cost of new employer compliance burdens, higher projected federal outlays and contingent fiscal exposure, reduced near‑term take‑home pay for some workers, and governance/administrative risks that could reduce net returns or complicate implementation.
Qualifying workers without employer retirement plans (including gig and freelance workers) gain automatic-enrollment federal retirement accounts with immediate ownership, default savings (3%), and employer withholding to expand participation and build retirement savings.
Lower- and middle-income workers receive a refundable credit (1% of gross income) plus government matching and advance payment options, increasing net contributions and boosting account balances for people who otherwise save little or nothing.
Low-income individuals can exclude the Fund account balance from means tests, so having retirement savings won't make them ineligible for SNAP, Medicaid, or other federal assistance, reducing a barrier to saving.
Small and other employers face new compliance responsibilities (identifying qualifying workers, withholding/remitting contributions, penalties for noncompliance), creating administrative costs and potential fines for small businesses.
Federal finances and taxpayers may face materially higher long‑term costs or contingent obligations because Fund payments are additive to Social Security, refundable credits/advance payments increase outlays, and Treasury credit authorities could create exposures if uptake is large.
Automatic default contributions reduce employees' take‑home pay (unless they opt out) and contributions are treated as Roth (taxed when made), which can burden low‑income workers and reduce current-year tax relief compared with pre‑tax plans.
Based on analysis of 12 sections of legislative text.
Creates a federal American Worker Retirement Fund with individual accounts, a refundable matching tax credit (new IRC §25F), and a new Investment Board to administer the program.
Creates a new American Worker Retirement Fund (AWRF) in the U.S. Treasury, a government-managed, individual-account retirement program for workers without access to an employer retirement plan. The law sets up a five-member independent Investment Board to run the Fund, requires participant accounts and contributions, and provides a refundable tax credit that automatically flows into participants’ AWRF accounts with a tiered government matching formula. The Act protects Fund assets from ordinary creditor claims, excludes account balances from federal means-tested benefit eligibility for people under 65, requires participant financial literacy before certain early withdrawals or loans, and authorizes Fund investments, administrative spending, distributions, loans, and limited enforcement for child support, alimony, and tax levies. The new tax credit takes effect for taxable years beginning after December 31, 2024.