Rhode Island may soon become one of the first states to let self-employed workers join its auto-IRA for self-employed residents. A new bill would expand the state’s Rhode Island Secure Choice program to include freelancers, independent contractors, and solopreneurs who currently lack access to employer-sponsored retirement plans. For the millions of Americans who work for themselves, this kind of policy shift could be a turning point.
Rhode Island Bill Would Expand Auto-IRA For Self-Employed Individuals
The proposed legislation would amend the law that created Rhode Island Secure Choice, the state’s automatic IRA enrollment program. Currently, the program requires certain employers who do not offer retirement plans to automatically enroll their workers in a state-facilitated IRA. Workers can opt out at any time, but the default enrollment has proven effective at boosting savings rates.
The new bill adds a category called “optional employees” to the program. Under this change, anyone age 18 or older who is not employed by an eligible employer could voluntarily enroll in Rhode Island Secure Choice. That means freelancers, gig workers, and sole proprietors would gain access to the same low-cost, professionally managed retirement savings vehicle that traditional employees use.
This is a meaningful development. According to recent data, roughly 57 million Americans participate in some form of freelance or independent work. Many of them have no workplace retirement plan and struggle to set up individual accounts on their own. The auto-IRA for self-employed workers addresses that gap directly.
What This Means For Self-Employed Professionals
Retirement savings remain one of the biggest financial challenges for people who work for themselves. Without an employer match or automatic payroll deductions, many freelancers simply never get around to opening a retirement account. The behavioral economics research is clear: automatic enrollment dramatically increases participation rates.
Rhode Island’s proposal would give self-employed workers a simple on-ramp. Instead of researching brokerages, comparing fee structures, and choosing investment allocations on their own, they could enroll in the state program and start contributing immediately. Contributions would be deducted automatically, and the investment options would be professionally managed.
Of course, self-employed workers already have options. A SEP IRA allows contributions of up to 25% of net self-employment income, with a maximum of $70,000 in 2026. Solo 401(k) plans offer even higher contribution limits for those with no employees. However, many freelancers, particularly those just starting out or earning a modest income, never take the step of opening these accounts.
The auto-IRA model removes friction. It works because it changes the default from “not saving” to “saving.” For self-employed workers who find setting up retirement accounts intimidating, this kind of program could make a real difference.
What You Should Do Now
Whether or not you live in Rhode Island, this proposal signals a broader trend worth paying attention to. Here is what we recommend:
- Evaluate your current retirement savings strategy. If you are self-employed and do not have a retirement account, consider opening one now. SEP IRAs, Solo 401(k)s, and traditional IRAs all offer tax advantages that can significantly reduce your annual tax bill.
- Watch your state legislature. Rhode Island is not the only state exploring auto-IRA expansion. California, Oregon, Illinois, and several other states already operate auto-IRA programs for traditional employees. Legislative momentum is building to extend these programs to independent workers.
- Automate your contributions. Even without an auto-IRA program, you can replicate the behavioral benefits by setting up automatic monthly transfers to a retirement account. Consistency matters more than the amount, especially early in your career.
- Factor retirement into your pricing. Traditional employees receive retirement benefits as part of their compensation package. As a self-employed professional, you need to build that cost into your rates. A good rule of thumb is to set aside 10% to 15% of your net income for long-term financial independence.
Broader Context And What To Watch Next
Rhode Island’s proposal fits into a nationwide push to close the retirement savings gap. Currently, about 15 states have enacted or are implementing auto-IRA programs. Most of these programs target small businesses that do not offer retirement plans. Extending them to self-employed workers is a logical next step.
At the federal level, the SECURE 2.0 Act, passed in 2022, included several provisions aimed at expanding access to retirement savings. However, it did not create a federal auto-IRA program. Several members of Congress have introduced legislation to do so, but none have gained enough traction to pass.
The retirement savings gap for self-employed workers is significant. Studies consistently show that independent workers save less for retirement than their traditionally employed counterparts. The median retirement savings for self-employed individuals over age 50 are substantially lower than those of salaried workers in similar income brackets.
If Rhode Island’s bill passes, it could serve as a model for other states. We will be tracking this legislation closely and will report on any updates as they develop.
Frequently Asked Questions
What is an auto-IRA for self-employed workers?
An auto-IRA is a state-facilitated retirement savings program that automatically enrolls eligible workers into an individual retirement account. Traditionally, these programs cover employees of small businesses that do not offer their own retirement plans. The Rhode Island proposal would extend this option to self-employed individuals, allowing them to voluntarily enroll and benefit from the same low-cost, professionally managed investment options.
Would the Rhode Island auto-IRA replace my existing retirement account?
No. The auto-IRA would be an additional option, not a replacement. If you already have a SEP IRA, Solo 401(k), or traditional IRA, you can continue using those accounts. The auto-IRA is designed primarily for self-employed workers who do not yet have a retirement savings vehicle. Contribution limits for auto-IRAs are typically aligned with standard IRA limits, which are $7,000 in 2026 (or $8,000 if you are 50 or older).
When could this program become available?
The bill is currently in the Rhode Island legislature and has not yet been signed into law. If passed, implementation would likely take several months to a year, as the state would need to update the existing Secure Choice infrastructure. Self-employed workers in other states should watch their own legislatures for similar proposals, as several states are considering comparable expansions.
Photo by Sasun Bughdaryan; Unsplash
