HB4718 amends ERISA and the Internal Revenue Code to permit retirement-plan participation for 18-year-olds under a two-path framework. The standard path substitutes 18 for 21 in the eligibility rule, while a second path creates a 24-month window during which an employee must accumulate at least 500 hours of service across two consecutive 12-month periods to qualify.
The bill also introduces a counting rule for employees who participate solely because of the 18-year eligibility expansion, delaying their recognition as participants for five years. Finally, the amendments apply to plan years beginning one year after enactment, aligning effective dates with the act.
At a Glance
What It Does
The bill lowers the age for minimum participation in ERISA plans to 18 and establishes a 24-month, 2-consecutive-year, 500-hours-of-service mechanism as an alternative path to eligibility. It also updates cross-references in ERISA and the IRC and adds a five-year counting rule for certain participants.
Who It Affects
Employers that sponsor ERISA-governed retirement plans and their plan fiduciaries, plan administrators, and workers who begin full-time employment at age 18 and accumulate hours toward eligibility.
Why It Matters
This bill broadens initial access to retirement savings for younger workers, which could alter plan participation dynamics, nondiscrimination testing considerations, and administration workloads for sponsors and service providers.
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What This Bill Actually Does
The Helping Young Americans Save for Retirement Act alters two core federal frameworks—ERISA and the Internal Revenue Code—to permit retirement-plan participation by workers as young as 18, under clearly defined conditions. Instead of the current 21-year-old threshold, an 18-year-old employee can join a defined benefit or defined contribution plan if they meet one of two pathways.
The first is a broad, standard rule that substitutes 18 for 21 in the applicable eligibility provision, aligning with ordinary plan entry patterns. The second pathway introduces a 24-month period, comprised of two consecutive 12-month intervals, during which the employee must accumulate at least 500 hours of service; compliance with the 500-hour threshold in that window qualifies the employee for participation by the close of the period.
The intent is to accelerate access to retirement savings at the start of a career, rather than waiting until a typical post‑college age.
The Five Things You Need to Know
The bill lowers the eligible age for ERISA plan participation from 21 to 18.
There is an alternative 24-month pathway requiring 500 hours of service across two consecutive 12-month periods.
Cross-references and headings in ERISA and IRC are updated to reflect younger workers, including adding 'AND CERTAIN YOUNGER EMPLOYEES.', A new counting rule delays counting certain participants for five years, preventing immediate distortion of participation metrics.
The amendments apply to plan years beginning one year after enactment.
Section-by-Section Breakdown
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Short Title
This section designates the act as the Helping Young Americans Save for Retirement Act. It signals that the bill’s substantive changes are focused on adjusting minimum participation standards for pension plans and qualified trusts within ERISA and the Internal Revenue Code.
ERISA: Age 18 eligibility and related changes
Section 2(a) makes three targeted changes to ERISA: (1) it lowers the minimum eligibility age to 18 by replacing 21 with 18 in the age-related language of section 202(c)(1), subject to the alternative 24-month window; (2) it implements related conforming amendments to section 202(c) (including renaming “SPECIAL RULE” to “SPECIAL RULES” and inserting “AND CERTAIN YOUNGER EMPLOYEES” for consistency with the younger-eligibility framework); and (3) it adds an independent qualified public accountant provision clarifying counting rules for employees who participate solely because of section 202(c)(1)(A), delaying their counted participation for five years after the first such employee becomes a participant.
ERISA: Independent accountant provision
This subsection adds to ERISA §104(a)(2) a new paragraph authorizing an independent qualified public accountant to determine, for purposes of participation counting, that employees who qualify only because of the 18-year-old eligibility rule shall not be counted as participants until five years after their initial participation begins.
IRC: Age 18 eligibility and conforming changes
Section 2(b) parallels the ERISA changes within the Internal Revenue Code. It updates 401(k)(2)(D) to substitute 18 for 21 in the eligibility framework and adjusted cross-references so that the 18-year-old pathway aligns across the tax code. It also updates related provisions in 403(b)(12) to reflect younger-employee participation and the revised cross-references among plan types.
Application and effective date
This section states that the amendments apply to plan years beginning on or after a date that is one year after enactment. It provides the temporal scope for implementing the new age-eligibility rules and the associated counting and conformity changes across ERISA and the IRC.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Young workers turning 18 who enter the labor market and can start saving earlier under ERISA/IRC-qualified plans, potentially improving long-term wealth accumulation.
- Employers with defined contribution or defined benefit plans who want to broaden coverage and enhance workforce recruitment/retention by offering earlier access to retirement benefits.
- Plan sponsors and administrators who will need to implement updated eligibility rules, with clearer pathways for younger participants and updated cross-references in plan documents.
- Recordkeepers and financial services providers that service retirement plans, potentially expanding the pool of eligible participants and associated workflows.
Who Bears the Cost
- Small employers and mid-sized sponsors that must update administrative processes to track 500 hours over a new 24-month window and to apply the reduced age threshold.
- Plan sponsors who must adjust nondiscrimination testing, eligibility determinations, and communications to reflect younger-employee participation.
- Administrative and compliance costs associated with implementing the five-year counting rule for certain participants and coordinating with independent accountants.
- Payroll and human resources teams that may need enhanced hours-tracking systems to verify eligibility under the two-path framework.
Key Issues
The Core Tension
The central tension lies in expanding early access to retirement savings (benefiting young workers) while preserving plan integrity and administrative feasibility for sponsors. Lowering the eligibility age may reduce barriers to saving but can complicate hours-tracking, testing, and counting of participants, particularly for employers with variable workloads or small HR teams.
The bill creates a meaningful expansion of early retirement-plan access, but it also introduces several implementation considerations. The 500-hour requirement within a two-year window creates a clear productivity and hours-tracking obligation for employers and payroll systems.
The shift to an 18-year-old eligibility threshold could affect plan-specific nondiscrimination testing and enrollment dynamics, especially for employers with high turnover or seasonal work. The five-year counting rule for employees whose participation is triggered solely by age-eligibility expansion introduces a delayed impact on measured participation and could influence plan design decisions and administrative benchmarking.
Cross-references and heading changes across ERISA and the IRC will require plan documents, disclosures, and possibly vendor updates to maintain consistency across statutory and regulatory language.
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