Uncle Sam's new rules for Retirees

Speaking on Monday at the White House Conference on Aging, President Barack Obama directed the U.S. Department of Labor to provide -- by the end of the year -- "a clear path forward for states to create retirement savings programs" for people who don't have other retirement savings options through their employers.

Two states, Washington and Illinois, have already launched state-run, automatic savings plans, and some 25 other states are considering them. Action by the Labor Department would eliminate concerns that these plans could run afoul of the Employee Retirement Income Security Act, or ERISA, or other federal laws governing the management and taxation of retirement plans.

State and municipal governments are already running more than 3,600 public employee retirement plans, serving 22 million public employees, says Hank Kim, executive director and counsel for the National Conference on Public Employee Retirement Systems. While there are some "high-profile and notable exceptions," in general, Kim says that public employee retirement plans "are well-funded and sustainable." And while assets of public and private retirement plans couldn't be combined, "if the public plan and the state were inclined, there could be co-investing to take advantage of economies of scale," giving state retirement plans the same price break on investment fees that public employees now enjoy, Kim suggests.