New Retirement Plan Initiatives

Treasury Secretary Geithner announced the administration’s steps to make it easier for individuals to save for retirement. These steps do not require congressional action. Instead, the IRS has issued rulings on various measures to enhance retirement savings. They include:

• Providing an escalator feature in 401(k) plans to increase an employee’s contributions without requiring an affirmative election.
• Allowing unused paid time off (such as sick days or vacation days) to be contributed to a retirement plan rather than received in cash.

The rulings give guidance and sample retirement plan amendments that employers can use to implement these retirement savings incentives.

Note: The IRS is also working on an administration proposal to allow taxpayers to use their tax refunds to directly purchase U.S. savings bonds.

Sources: Rev. Rul. 2009-30, Rev. Rul. 2009-31, Rev. Rul. 2009-32, Notice 2009-65, Notice 2009-66, Notice 2009-67, and Notice 2009-68