Senator Calls For New Retirement Tax Incentives

One answer, he said, is to create a new type of 401(k) plan.

This new type of plan would have several features, Goodman said. First, he said, employers would automatically enroll all employees who meet the eligibility requirements unless the employees opt out.

Second, he said, the initial minimum contribution rate should be 4% to 6% unless the employee specifically opts for a smaller amount.

Third, Goodman said, employers would have to include in participants' investment options "premixed efficient portfolios"?portfolios designed to give the maximum rate of returns at different risk levels?or a professional-directed investment option, or both.

Companies, he added, should be encouraged, but not required, to provide employees who choose to manage their own accounts with access to investment advice.

The new plans also would prohibit cashouts by the plan or employee following termination of employment but before retirement, death or disability, Goodman said.

Instead, he said, the account could be rolled over into a similar qualified plan or remain in the previous employer's plan if the new employer does not have a qualified plan.