RESA is also viewed by some as a way for small businesses to offer benefits on par with those of larger companies.
“When you think about retirement-plan coverage and the private-sector workforce, the small employers are often the ones that don’t offer coverage anywhere near the rates that we see for large employers," Drew Carrington, head of institutional defined contribution at Franklin Templeton Investments, said in a podcast. "This is a way now for small employers to get together, achieve those economies of scale that we see in large plans."
With the dearth of small employer options, states have encouraged small employers to use state-sponsored auto-IRA programs.
If Democrats win the House, auto-IRA programs could gain greater prominence. Richard Neal (D-Mass.), ranking member of the House Ways and Means Committee, has introduced a bill that would require employers to automatically enroll employees in an auto-IRA unless the employee opts out.
Research from Fidelity shows that only one in 10 workers eligible for automatic enrollment in employer-provided plans proactively opt out of plans. The non-partisan Retirement Security Project has estimated that the auto-IRA proposal could raise net national savings by nearly $8 billion annually.