Lawmakers Give 401k MEPs a Close Look

They examined four proposals to simplify retirement plan administration

401k, MEPs, retirement, regulation,Examination is good; action is better.

Politicos might finally understand—the path to more retirement coverage for American workers lies in simplifying and modernizing often arcane employment and labor laws.

The Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Tim Walberg, R-Michigan, held a hearing on Wednesday to examine four bipartisan proposals to do just that for employees of businesses large and small.

The hearing focused on legislative proposals that would update the Employee Retirement Income Security Act (ERISA) that governs and sets minimum standards for employee benefit plans.

“Many ERISA provisions related to retirement plan administration are in desperate need of updating, with some having last been revised over two decades ago,” Rep. Walberg said in his opening remarks.

There are nearly 700,000 private pension plans covering almost 135 million participants, with approximately 92.5 million American workers actively participating in and contributing to their plans.

“Red tape and unnecessary federal restrictions stand in the way of lower costs for small businesses and have contributed to compliance uncertainty, making it harder for employers to provide their employees with retirement savings programs,” he added. “These are not the most encouraging things to hear as more Americans are retiring, and studies show that Americans should be saving more for retirement.”

Specifically, subcommittee members and witnesses discussed the following:

  • R. 854, the Retirement Security for American Workers Act, “eliminates two burdensome requirements affecting multiple employer plans: the “common nexus” requirement that prevents adoption of open multiple-employer plans (MEPS), in which unrelated employers may collectively satisfy plan administration requirements, and the “one bad apple” rule that punishes all employers in a plan for the failure of one employer to meet the plan’s requirements.”
  • R. 4604, the Increasing Access to a Secure Retirement Act of 2017, “reduces the compliance uncertainty that companies face by amending ERISA to clarify existing rules that provide a fiduciary safe harbor when selecting an annuity provider.”
  • R. 4158, the Retirement Plan Modernization Act, “increases the automatic cash-out limit for retirement plans from $5,000 to $7,600 and defrays some of the costs of retirement plan administration for small employers.”
  • R. 4610, the Receiving Electronic Statements to Improve Retiree Earnings Act, “authorizes the electronic disclosure of retirement plan information so that plan participants may access their plan information online.”

“The foregoing proposals would go a long way toward improving the successful defined contribution plan system and better equipping American workers with the tools needed to build a secure retirement,” said Paul Schott Stevens, President and CEO of the Investment Company Institute.

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