Maine legislators on brink of voting for state IRAs

A majority of committee members considering a bill in the Maine state Senate that would create state-sponsored individual retirement accounts recommended the bill’s passage.

The legislation, introduced in the Maine Senate in February, would create a public-private partnership to promote individual retirement savings accounts.

Among its many provisions, the law would allow an eligible employee to contribute to an account through payroll deductions, require an employer to offer the plan if it did not already offer a federally recognized qualified plan, and provide for automatic enrollment of employees while allowing them to opt out.

In addition, the plan would have a minimum or default contribution amount, offer default escalation of contribution levels that can be increased or decreased within the limits allowed by the Internal Revenue Code, and allow plan account owners to maintain their accounts regardless of place of employment and to roll over funds into other retirement accounts.

The intent of the legislation is to keep the plan's administrative fees low and allow the use of private-sector partnerships to administer and invest the contributions to the plan under the supervision and guidance of the board.

A number of states have established or are considering setting up auto-IRA programs. In June, the Colorado state legislature passed a bill to implement the Colorado Secure Savings Program.

[More: Recession would slow state auto-IRAs, MEPs]