In another attempt to decide what’s best for the citizens of Washington, lawmakers recently introduced legislation that would automatically enroll employees in an Individual Retirement Account (IRA) at the employees’ expense. The employee would have to take a positive step to opt-out if they didn’t want to participate.

House Bill 2516 would require employers that have existed for at least 5 years and have 6 or more employees, to participate in the Washington Small Business Retirement Marketplace. The retirement marketplace will offer several state selected IRA plans from private investment companies. The state will monitor the investment companies, set withdrawal rates and regulate employee contributions.

Of course, in order to administer the new retirement marketplace, the state will collect fees for program administration and to cover the costs of hiring investment advisors, consultants and other professionals. These fees will be passed onto the employees enrolled in the plan, reducing their return on investment. It also creates needless new government jobs.

This is a solution to a problem that doesn’t exist.

There are literally thousands of investment options available to savers and investors. There are no restrictions preventing employees from enrolling in an IRA if an employer doesn’t offer a 401k. Unlike the free market where employees can choose an IRA that works best for them, under HB 2516 employees would have to choose from a limited number of government approved plans. The employees would be tightly regulated in how much they can invest and withdrawal.

HB 2516 is regulation that is unnecessary and puts an unfunded mandate on small businesses. Administering the retirement marketplace program will take employee time, increase employer costs and provide no benefit over an IRA purchased through a traditional investment advisor.