The House of Representatives' Ways and Means Committee has voted to approve legislation requiring more employers to provide 401(k)-type plans, according to news reports.

Under the provision, companies with more than five employees that don’t already offer a retirement plan or take part in a state-administered program would be forced to enroll their staff into either individual retirement accounts or a new type of 401(k) plans, the Wall Street Journal writes.

Companies in operation for less than two years and employees under 21 would be exempt from the requirement, according to the publication. But the legislation would require employers to automatically enroll part-time staff if they work more than 500 hours a year for two consecutive years, the Journal writes.

Unless they opt out, employees would then automatically contribute 6% of their salaries for the first year into the plan, according to the publication. During the subsequent years, those contributions would rise by 1% annually, until they reach 10%, the Journal writes.

The default investment offered would be target-date funds, while the IRA would also offer a principal preservation fund and a balanced fund, according to the publication. And participants reaching $200,000 in their 401(k) accounts would be able to use their assets for annuities, the Journal writes.

The legislation was passed as part of the their $3.5 trillion healthcare, education and climate bill, with the vote divided among party lines, according to the publication.

In May, the Ways and Means Committee approved the Securing a Strong Retirement Act of 2021, which encouraged employers to offer plans, through automatic enrollment provisions, but didn’t require it.

The new legislation, if passed, is “going to move us farther towards universal coverage than a bill ever has,” said Michael Kreps, a principal at Groom Law Group, who specializes in retirement plans and policy, according to the Journal.

Do you have a news tip you’d like to share with FA-IQ? Email us at editorial@financialadvisoriq.com.