Congress continues to signal strong, bipartisan interest in improving retirement savings opportunities and lifetime income choices for workers and retirees, with the latest example being a new bill introduced Wednesday that will help small businesses and non-profits participate in multiple employer plans (MEPs).
Sens. Chuck Grassley (R-IA), Maggie Hassan (D-NH) and James Lankford (R-OK) on Wednesday introduced the Improving Access to Retirement Savings Act. This bill will build off the successful implementation of the SECURE Act and make improvements so that more organizations and small businesses can participate in multiple employer plans (MEPs).
“This legislation will help more Americans save for their retirement while also giving our small businesses and nonprofits another avenue to invest in their employees’ future financial security,” Grassley said. “Government should be doing everything it can to help Americans save more of their own hard-earned money. I’m proud to author this bipartisan bill that will help more Americans retire with peace of mind and independence.”
The Improving Access to Retirement Savings Act will allow more groups to participate in MEPs by allowing 403(b) plans, which are prevalent among tax-exempt organizations, to participate. It also clarifies that small employers that join a MEP may take the small employer pension plan start-up credit for their first three years in a MEP, regardless of how long the MEP has been in existence.
“By making sensible updates to the law, this legislation makes it easier for small businesses and nonprofits to offer plans and expand access,” Lankford said, giving Americans the opportunity to save more of their money for retirement sooner.
Additionally, this legislation allows for a grace period to correct reasonable errors in administering automatic enrollment and escalation features when groups are enrolling in a MEP, provided they are corrected within 9½ months of the end of the year in which the mistakes were made. Finally, it would provide employers additional time to make retroactive plan amendments that increase benefits for employees.
The legislation has support from the American Benefits Council, Insured Retirement Institute, American Council of Life Insurers and the American Retirement Association.
“Expansion of Open Multiple Employer Plans to include 403(b) accounts, the creation of the safe harbor for correcting employee deferrals and the clarification for small businesses who wish to utilize a credit to offer a retirement plan to their employees, are all key components of the bill that will build on and strengthen the current system,” wrote ACLI President and CEO Susan Neely in a letter of support.
“The bill provides common-sense, bipartisan solutions that will help address the challenges and obstacles that continue to inhibit savings and producing income during retirement,” wrote Paul Richman, IRI Chief Government and Political Affairs Officer, in IRI’s letter of support.
IRI cited two key provisions of the bill in its letter. First, the bill would encourage non-profit organizations to offer employee retirement benefits by providing those groups with the same access to pooled employer plans (PEPs) that the SECURE Act offered to small businesses.
The measure also clarifies when a tax credit can be used by small businesses to help facilitate offering retirement plans to their employees if they join a MEP or PEP. This clarification will encourage more small businesses to offer a retirement plan and facilitate greater use of MEPs or PEPs as the means to provide that plan.
Richman wrote that the Improving Access to Retirement Savings Act complements the Securing a Stronger Retirement Act (HR 2954), which recently passed unanimously in the House Ways and Means Committee.
“With the Senate and the House introducing comprehensive retirement security legislation, IRI urges both chambers of Congress to work together and quickly act to bolster retirement security,” Richman said.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
