The California State Assembly has passed a bill that would allow private-sector employees who don’t have employer-based pension plans to open individual retirement savings accounts with the California Public Employees’ Retirement System (CalPERS).
The California State Senate will now consider the bill, A.B. 2940. If enacted, it will make California the first state to allow private-sector workers to save for retirement through a public-employee pension system.
The bill would create the California Employee Savings Program, available to employers that establish or participate in a SIMPLE IRA program under Section 409(p) of the Internal Revenue Code of 1986.
The program would give workers access to voluntary, secure and portable retirement savings accounts.
Before the program could be established, California would need to ensure that it would not conflict with the Employee Retirement Income Security Act. Several federal agencies would also have to approve it, including the IRS, the U.S. Department of Labor and the Securities and Exchange Commission.
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