NEW YORK (TheStreet) -- Half of Americans employed in the private sector work for small businesses. That means many workers simply don’t have access to retirement plans. Big firms lure talent with tax-advantaged savings plans like 401(k)s -- and even match workers' contributions, while neighborhood businesses often lack the means to provide such benefits.
But now, the small-business backbone of the economy is slowly rising to the occasion, often with the assistance of state governments.
Here's one such example from the state of Washington: The Small Business Retirement Marketplace, signed into law last week by Washington Governor Jay Inslee, will provide an estimated 1.5 million residents in the state with access to workplace-based retirement accounts.
“Employers do not have to do anything but deduct and forward the money -- the same way they handle taxes,” said Rep. Larry Springer, a co-sponsor of the state legislation, in a press statement. “We know people are very unlikely to save for retirement if they are not offered a plan through work. The Small Business Retirement Savings Marketplace will allow more workers access to a safe, easy and affordable way to retire in dignity.”
Washingtonians will be able to defer a portion of their pay automatically to an IRA or another savings plan, and the accounts will be portable, enabling workers to take their benefits with them as they move from job to job. Employers will also have the option to match as much as 3% of employees contributions.
“Small businesses often don't have the information and resources available to find the right retirement savings plan for their employees, and this program will provide easy access to low cost, low fee options that are fully portable and provide the same investor protections available to private investors," said Marin Gibson, Securities Industry Financial Markets Association managing director, in a release.