Retirement Savings Simplified
March 28, 2023
How’s your ERSA doing? I couldn’t be more thrilled with mine. It’s not just the performance of my investments (decades of low-cost indexing), it’s the simplicity of having ONE plan that I love. I’ve worked at multiple universities and K-12 school districts so it’s nice having only ONE workplace retirement plan — the ERSA — to manage. My wife, who works in the private sector, also has an ERSA. Our daughter, who recently started her professional career, has one too. But it wasn’t always that way…
Dark Ages
Back in the dark ages it was an alphabet soup maze of varying plans for varying “type” of employee: 401(a), 401(k), Simple 401(k), 403(b), 457(b). Each plan had different eligibility and operating rules. So dumb. So needlessly complex. While many point to Social Security as the most ground breaking retirement plan legislation in U.S. history, I would argue that the 2003 adoption of the Bush Administration Plan to consolidate all workplace defined contribution plans into one simple plan — the ERSA (Employer Retirement Savings Accounts) — deserves some consideration as well.
If Only
Sadly, the innovative plan, which you can read about here, was never adopted. What a missed opportunity. We recently interviewed one of the key contributors to the 2003 plan to simplify savings, William Sweetnam, former Benefits Tax Counsel at the Treasury Department from 2001-2005. He detailed the idea, the reasons behind it, and the effort to get it passed (see link to pod below).
No Time Like the Present
It’s time to resurrect this idea. It’s so smart and so simple. Why are we burdening employers and employees with a confusing maze of retirement plans? It’s a tax on time and wildly inefficient. It’s as dumb as basing a system of measurement on the length of a long-dead monarch’s foot. Sigh.
Stay wise and well (and resurrect ERSA)
Related Podcast:
Man with the (Better Retirement) Plan If only Congress had adopted a 2003 Bush Administration plan to drastically simplify saving for retirement. We interview William Sweetnam the Benefits Tax Counsel at the Treasury Department from 2001-2005. Listen Now »