Studies abound showing that minorities and women have a difficult time saving for retirement, but in the current economy the challenges of putting money away for the future are plaguing most middle-class Americans.

President Obama is trying to tackle that problem by making it easier for employees to boost the bottom line of their 401(k)s or IRAs. Changes he supports that are being enacted in 2010 provide a good opportunity for financial advisors to reach out to current and potential clients and at the same time may help middle-class individuals to save more.

Starting next year, employees will automatically be enrolled in 401(k) plans, rather than having to choose to be enrolled. Employees will need to opt out of plans if they don't want to participate. Currently, employers can offer an opt-out plan, but do not have to do so. It's uncertain whether the new provision will apply to all employees or only new hires.

This feature has been shown to benefit younger workers in particular, those who often don't think about retirement, says Thomas Foster, the national retirement spokesperson for the Hartford, an insurance-based financial services company. The feature also particularly helps small businesses without human resource departments because they can, says Foster, "enroll employees into accounts at the date of hiring unless the worker opts out. It is the wave of the future ... that takes away any burden of nondiscrimination testing."

However, the Internal Revenue Service still needs to write specific regulations on how this change and others should be implemented. Foster hopes the rules will be written simply. "There was a two-sentence change for minimum distributions of retirement assets some years ago, and it took the IRS 500 pages to write the regulations for it," he says. "So conceptually, the changes to the IRS rules proposed by President Obama sound great, but the IRS has not done its part yet."

Thomas Noble, founder and president of the Noble Group, a benefits-consulting firm and advisor to retirement plan sponsors in Houston, agrees wholeheartedly that the change is a positive one. "It is a tremendous feature that will lead to additional savings," he says.

The rules will also be changed to allow employees to put the monetary value of unused sick days and vacation time into retirement accounts, which Foster says will further boost workers' retirement savings. Yet this provision could also pose challenges for employers, their workers and financial advisors. For one thing, employers will have to provide matching contributions for the value of those days off at the same level of other employee contributions.

"Companies are looking for ways to cut costs right now, so this could be a difficulty if they have to match more deferred income contributed by employees," Noble says. But employer contributions are a tax-deductible business expense, so that lowers the cost somewhat.

At the same time, employees and their advisors will have to make sure the added contributions from vacation and sick time do not exceed the limits for 401(k)s and IRAs, which are not changing. The employee tax-deferred contribution limit will remain at $16,500 annually for 401(k)s and $5,000 annually for IRAs. An exception allows people 50 to 70.5 years of age to contribute a maximum of $6,000. In 2010, the limits will be indexed to inflation. Foster thinks it would be helpful for the federal government to relax some of the contribution limits.

"One client has already sent me the proposed guidelines and asks how to take advantage of it, but most have not brought up the changes yet," says Noble.

A final change will allow tax filers to put tax refunds into their 401(k)s or IRAs (if, again, they are kept within contribution limits). But this rule may also be hard for employers to implement: The tax refunds will need to be deposited into the 401(k) accounts, yet the company doesn't control the money, since the refunds are typically paid directly to the taxpayer. How employers must handle these contributions will depend on how the regulations are written.

Another change allows people without retirement accounts to have part of the tax refund repaid as a U.S. Savings Bond, which would also encourage saving, Obama says.

And beginning in 2010, the $100,000 income limit has been removed for those converting a traditional IRA to a Roth IRA. That means high earners will be able to convert their tax-deferred retirement accounts to Roths. (Roth contributions are made after taxes are imposed, so all withdrawals, including investment gains, are tax-free.)

"There can be complicated tax questions that are involved with the Roth conversions, and we have learned you need to get the CPA involved from the beginning, along with the client and financial advisor," says Stuart Zimmerman, principal of Buckingham Family of Financial Services. "The financial advisor should not try to do this without coordinating with the client's CPA." (See the article "You Make the Call" in the November issue of Financial Advisor to learn more about Roth conversions and what advisors think of them.)

Retirement assets are already starting to climb as the economy inches into recovery. Total assets in retirement accounts reached $14.4 trillion at the end of the second quarter, according to the Investment Company Institute in Washington, D.C. This is a 7.4% increase from the $13.4 trillion held at the end of March and is attributable to increases in the value of stocks and bonds, as well as some increase in total savings, ICI says. The peak level of assets was reached at the end of 2007, when it hit $18 trillion.

But increased savings can have a downside, says Brian Reid, ICI chief economist. "If you have increased savings rates," he says, "you have decreased spending, and the economy cannot recover unless people spend money. The money being saved will be used for consumption in the future, not now."

Obama's changes "make saving simpler, easier and more effective for America's working families," says David John, a principal with The Retirement Security Project (RSP), a Washington-based advocacy and public policy organization. "As with everything, it probably will take time to implement the changes, and everyone should check the details once they are published, but implementation in this case should be fairly easy."

The RSP would also like to see automatic enrollment for 401(k)s extended to current employees, as well as new hires, and would like to see initial contribution rates increased from the current 3% to 6%, escalating automatically each year to a maximum of 10% or 12%. RSP also would like a tighter definition of target-date funds and additional disclosures for them.

The current changes in retirement savings may provide an opportunity for people to learn more about their employer-sponsored plans, says the Hartford. In a recent study by the Hartford Financial Services Group Inc., 34% of Americans (one out of three) said they have little or no understanding of their retirement plans, and nearly three in four (74%) have less than a complete understanding of their plans.

"There is no better time than now for a financial advisor to step up and serve in a consultative role for plan participants," says Foster of the Hartford. "Employers should work closely with their retirement plan consultants to help employees understand how to make use of the changes. This is a great opportunity for advisors to go to the plan participants or the human resources person and offer to help educate the employees. That, in turn, gives them access to the employees while providing a good service."