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Should Teenagers Have 401(k)s? These Senators Think So
By Pete Grieve MONEY RESEARCH COLLECTIVE
Employers say opening a 401(k) at 18 Is too early. A new bill could change that.
More than 71 million Americans have access to 401(k) accounts — tax-advantaged retirement plans that allow workers to set aside pre-tax income and watch it grow tax-deferred. But some of the country’s youngest workers are left out, and a group of senators wants to fix that.
Under current laws, employer-sponsored 401(k) plans can be offered to younger workers, but employers often set the minimum age as high as 21. A recently reintroduced bill in the Senate would set the minimum age at 18, requiring employers that offer retirement plans to include their younger employees.
The “Helping Young Americans Save for Retirement Act,” reintroduced on May 12 by Sen. Bill Cassidy, R.-La., and Sen. Tim Kaine, D-Va., would revise Internal Revenue Service code and the Employee Retirement Income Security Act of 1974, or ERISA, to make employer-sponsored 401(k) plans available to employees 18 and up. The change would also apply to other ERISA-governed retirement plans, including some pensions.
In a statement, Cassidy and Kaine said the bill is meant to expand access to these plans to young workers, arguing that the proposal is crucial, given the importance of saving for retirement early.
“Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” Cassidy said. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”
The bill was previously introduced in November 2023 in the last Congress. Three other Democrats and two other Republicans joined as cosponsors, but it did not advance out of a Senate committee.
The lawmakers said the bill would also eliminate “barriers that discourage companies from offering these benefits to younger employees,” mentioning “costly provisions that would otherwise make covering younger workers expensive.” Namely, the bill would relax rules around mandatory audits for employers extending pension plans to individuals under 21.
Supporters of the Helping Young Americans Save for Retirement Act stress the importance of helping young people get into the routine of making consistent retirement contributions. Early retirement contributions can grow for many decades, supporting a more comfortable retirement for the next generation of savers.
Young adults who don’t have access to 401(k)s shouldn’t let that deter them from saving money when they’re able. Most savings and investment accounts do not require you to be 21. Even children can save with Roth IRAs and brokerage accounts if their parents help them open custodial accounts.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.