Daines Bill would Strengthen Retirement Security for Working Montanans

By Tim Summers, AARP Montana State Director

Over 70 million Americans contribute to 401(k) and similar type retirement plans, and approximately 10 million change jobs in any given year. That national trend is no different in Montana. Now days, a typical Montana worker may have 7 or more different jobs over the course of his or her entire work career.

This has created the problem of how to protect and preserve these multiple and often small accounts that will be needed for retirement income in the future. Most 401(k) and similar plans provide only two options – withdraw one’s savings at retirement age or cash out or roll-over one’s entire account when changing jobs. Employers are permitted to force out accounts that contain less than $5,000.

The current system does not meet the needs of today’s workers who need to preserve their savings for future retirement income needs. It is often difficult for workers to keep track of multiple accounts -- some may not even know the proper legal name of the account or the entity currently holding it.

That is why AARP is pleased to support the Retirement Savings Lost and Found Act, Sponsored by Senator Elizabeth Warren (D) and Senator Steve Daines (R). This bipartisan bill would create a national on-line listing of employees’ retirement accounts to help workers keep track of their often multiple accounts accumulated over their working lifetimes.

If passed, this bill will enable workers to locate all of their accounts on the Registry with privacy protections. Employers or their plan administrators will electronically notify the Registry whenever an account leaves the employer plan.

The bill would also make it easier for employers who involuntarily roll-over small accounts to invest the funds in an appropriate low cost target date or life cycle investment fund. The smallest accounts, under $1,000, would be directed to the Treasury Department so that assets may be saved and prudently invested for retirement.

We appreciate Senator Daines for his leadership in addressing this important gap in our retirement security framework.