HR 4718119th CongressIn Committee

Helping Young Americans Save for Retirement Act

Introduced: Jul 23, 2025

Sponsor: Rep. Pettersen, Brittany [D-CO-7] (D-Colorado)

Economy & TaxesFinancial Services

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Helping Young Americans Save for Retirement Act would allow 18-year-olds to participate in employer-sponsored retirement plans under ERISA and the Internal Revenue Code. It creates two pathways for eligibility: (A) treat the 18-year-old as eligible under the usual age-based rule (with 18 substituted for 21), or (B) permit eligibility after a 24-month period that consists of two consecutive 12-month periods in which the employee has at least 500 hours of service, provided the employee meets the underlying service-based requirement. The bill also changes certain cross-references and terminology to accommodate younger workers and adds a rule requiring an independent qualified public accountant to address how participants who join solely because of this 18-year-old eligibility are counted. The provisions apply to plan years beginning one year after enactment. In short, the bill lowers the age for minimum participation in pension plans and qualified retirement accounts to 18 under specified conditions, aiming to boost early saving, while implementing safeguards to avoid distortions in participation testing.

Key Points

1Eligibility at age 18 under ERISA and IRC: The bill amends ERISA and the Internal Revenue Code to make 18-year-olds eligible to participate in pension plans and qualified retirement accounts, with the option to use an alternative 24-month, 500-hour path if the employer uses it.
2Two pathways to eligibility:
3- Path A: Immediate eligibility by treating 18 as the applicable age for the period allowed under the normal rules (replacing 21 with 18).
4- Path B: Eligibility after the first 24 months, consisting of two consecutive 12-month periods with at least 500 hours of service in each, and meeting the fundamental eligibility requirement by the end of those periods.
5Counting of younger participants: For plans where at least one employee participates solely because of the 18-year-old eligibility, no such employee shall be counted as a participant until five years after the first such employee becomes a participant, to avoid skewing participation tests.
6Independent accountant opinion: The 5-year counting rule requires an opinion from an independent qualified public accountant, clarifying how the rule applies for purposes of plan participation and related reporting.
7Conforming amendments and references: The bill updates headings and cross-references (e.g., “Special Rules” becomes “Special Rules and Certain Younger Employees,” and references to 401(k)(2)(D) and other sections are adjusted to accommodate younger workers).
8Effective date: The amendments apply to plan years beginning on or after the date that is one year after enactment.

Impact Areas

Primary group/area affected- Young workers ages 18–20 who are employed (including part-time or temporary workers) and participate in employer-sponsored pension plans or qualified retirement accounts (e.g., 401(k), 403(b)).- Employers and plan sponsors who administer pension plans and 401(k)/403(b) plans, who may need to amend plan documents and adjust eligibility rules.Secondary group/area affected- Plan administrators and HR/payroll departments responsible for tracking hours of service and eligibility timelines for younger workers.- Independent auditors and accounting firms, due to the new CPA opinion requirement related to counting participants.Additional impacts- Potential expansion of retirement savings participation among younger workers, which could affect plan design, eligibility testing, and administrative costs.- Plan amendments and possible changes in communications to explain new eligibility options to employees.- Changes in how minimum participation tests are calculated for plans with early-eligible young employees, given the 5-year non-counting rule.The bill focuses on eligibility thresholds and the mechanics of counting participants, not on changing contribution limits or vesting rules.While it seeks to encourage saving earlier, it also includes specific safeguards (like the 5-year non-counting rule) to maintain the integrity of participation testing.

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