All is not lost in the hyper-partisanship currently emanating from Washington, and new legislation meant to reduce costs for small businesses to help them offer retirement plans drew support from both sides of the isle.
The bill directs the Department of Labor and the Treasury Department to allow employers and sole-proprietors participating in plans administered in the same way to file a single aggregated Form 5500.
Under current law, despite sharing a common administrative framework, each individual plan is still required to file a separate Form 5500 to satisfy reporting requirements under ERISA and the IRS tax code. The proposal would eliminate this “duplicative reporting” by plan administrators, which will reduce costs for small businesses that maintain their plans.
However, to file an aggregated Form 5500, the retirement plans would need to have the same trustee, fiduciary, plan administrator, plan year and investment menu.
The self-employed, including sole proprietors and small business owners, are the most likely to establish a retirement savings plan that would benefit from and meet the requirements necessary to file an aggregated Form 5500.
The legislation, introduced in both the House and the Senate on the same day, was sponsored by Sens. Mark R. Warner, D-Virginia, a member of the Senate Finance Committee, and Susan Collins, R-Maine, chairman of the Senate Aging Committee.
Congresswoman Linda Sánchez, D-California and Congressman Phil Roe, R-Tennessee, sponsored the legislation in the House.
“As the nature of work continues to change, increasing access to workplace retirement plans is a crucial step in providing a secure retirement to millions of Americans,” Warner said in a statement. “For smaller employers, offering a retirement plan can be expensive and complex, so we should make it easier and reduce duplicative filing costs for them to offer retirement plans and promote retirement security for all workers.”
The legislation, unanimously approved by the Senate Finance Committee, points to a 2016 report by the Pew Charitable Trusts found that only 22 percent of workers at small firms have access to a workplace savings plan or pension, compared to 74 percent at firms with 500 or more employees.