The hotly debated SECURE Act is somewhat stuck in Beltway mud, but the administration is moving forward with its plans to make it easier for smaller businesses to band together to offer 401k plans.
The Department of Labor is putting the final touches on its rule to foster more multiple employer plans (MEP), a move brought about by President Trump’s “Executive Order on Strengthening Retirement Security in America” signed last August.
The 401k rule changes are expected in the next two weeks, according to The Wall Street Journal, citing a senior administration official.
The White House is pressing the department to complete a number of regulatory initiatives in the wake of Labor Secretary Alexander Acosta’s departure and the nomination of Gene Scalia as his replacement, the paper reports.
Acosta resigned earlier in July amid criticism of his handling of a sex-crimes case involving billionaire financier Jeffrey Epstein a decade ago.
Executive order
The executive order is part of administration policy “to promote programs that enhance retirement security and expand access to workplace retirement savings plans for American workers.”
“Under the expected retirement-plan rule, companies of any size could join multiple-employer plans, but small and midsize firms would likely have the most to gain in terms of cost savings,” the Journal writes. “Such plans would be able to use the larger scale of the combined businesses to bargain for lower administrative and investment fees than small businesses might otherwise get.”
The decline in defined-benefit pension plan coverage and the rise of defined contribution plans have left many workers without the means to save for retirement, one reason for the administration’s order. The Bureau of Labor Statistics finds that over 40 percent of the American workforce do not have access to a 401k or similarly tax-qualified plan, something driving many state-sponsored retirement proposals.
Federal action on MEPs enjoys widespread, bipartisan support.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.