House Finance Committee advances auto-IRA bill for Alaska workers

The House Finance Committee advanced legislation Sunday creating an automatic IRA program for Alaska employees whose employers do not offer retirement plans.

Senate Bill 21 establishes the Alaska Work and Save program. The program would set up individual retirement accounts for workers at businesses that do not provide employer-sponsored retirement benefits. Employees can opt out or adjust the contribution rate upon hiring. The program may be administered by Alaska or through a partner state.

At least 17 other states have implemented similar programs.

Senator Bill Wielechowski introduced the measure. He said the program addresses a barrier that prevents small businesses from offering retirement benefits to employees. Research shows that setting up a retirement program can cost a small business anywhere from $4,800 to $17,000 per year.

"This program will help Alaskan businesses offer a competitive benefit at no cost," Wielechowski said. "My office has received over 50 letters of support from small businesses all across Alaska."

Wielechowski said 71 percent of small businesses express concern about the cost to operate a retirement plan. A survey by the American Association of Retired People for Alaska revealed that 86 percent of small businesses say that more should be done to encourage Alaska residents to save for retirement.

The bill creates a statewide program that would set up individual retirement accounts for workers who do not already have employer-sponsored retirement plans. The savings would be fully portable when an employee changes jobs or retires. Employees could also direct all or a portion of their permanent fund dividend toward the retirement account.

Wielechowski said the bill was revised to exempt businesses with five or fewer employees that have been in operation for less than three years. The bill removes all penalties and fines for employers who do not participate.

"This is not an attempt to be oppressive for small businesses," Wielechowski said. "We are removing the fines and the penalties."

The bill also includes a provision to ensure that participants can benefit from future federal incentives. Those include potential $1,000 retirement incentives established under the SECURE 2.0 Act that President Trump spoke about during his State of the Union address.

Wielechowski said the percentage of Alaska seniors living below the poverty level nearly doubled between 2010 and 2021. One in 10 Alaskan seniors now lives below the poverty level. The number of seniors receiving SNAP benefits has doubled along with that.

"When Alaskans do not have savings, there is more of a reliance on state programs like SNAP and Medicaid, which cost our state hundreds of millions of dollars per year," Wielechowski said.