Washington's New Retirement Program Auto-Enrolls Workers into IRA
Starting July 1, 2027, Washington state will automatically enroll workers without employer-sponsored retirement plans into a new program called Washington Saves. The initiative pulls money from paychecks into an individual retirement account (IRA), with default contribution rates between 3% and 7%. Workers can opt out or adjust their contributions at any time. A key decision for participants is whether to choose a Roth IRA over a traditional one, as this choice affects future tax implications. Traditional IRA withdrawals count toward provisional income used in determining how much of Social Security benefits are taxable. In contrast, qualified Roth withdrawals remain tax-free and do not impact the formula that taxes portions of Social Security checks. The program aims to provide retirement savings for workers who have never had access to a 401(k) or pension plan. It is designed to help individuals build modest savings before full retirement age, potentially increasing their overall benefits by delaying Social Security claims.
Topics: auto-enrollment IRA Social Security taxation Washington Saves