Will This Bill Encourage Multiple Employer Plans (MEP)?

401k, retirement, legislation, MEPs
Retirement issues are increasingly front and center in Congress.

A flurry of legislation in the waning days of the year aimed at helping American workers save has complemented state efforts to introduce government-run retirement plans.

The latest, literally called the SAVE Act (Small Businesses Add Value for Employees) of 2017, was introduced last week by Reps. Ron Kind, D-Wisconsin, and Dave Reichert, R-Washington.

The politicos hope it will encourage more small businesses to offer 401k plans to their employees.

“A comfortable retirement is something everyone seeks to achieve—whether they work for a big business or a small business,” Rep. Kind said in a statement. “Unfortunately, many small businesses don’t offer retirement savings plans to employees because it can be complicated and costly. By taking steps to make it easier for Wisconsin small businesses to offer their employees a plan we level the playing field and set workers and businesses up for future success.”

In a nod towards the need for multiple employer plans (MEP), the bill removes the “common bond” requirement, enabling small businesses to pool together, regardless of industry, to offer retirement plans to their employees.

Rep. Kind says he’s been active on this issue since 2008.

It’s the second piece of retirement-related legislation introduced in as many weeks.  In an effort to save on plan-related expenses, and therefore provide better cost-effectiveness to 401k plan participants Rep. Jared Polis, D-Colorado, and Rep. Phil Roe, R-Tennessee, introduced the bipartisan Receiving Electronic Statements to Improve Retiree Earnings (RETIRE) Act.

The congressmen say the RETIRE Act would ensure 401k plan sponsors make retirement information easily accessible online while providing protections for employees who prefer to receive paper documents.

Under current law, employers are required to spend significant money and use significant amounts of paper mailing documents like notices, disclosures, and statements to retirees.

It’s estimated that the cost of sending just one four-page notice to recipients is between $36 and $60 million, according to the congressmen.

“We need to make it easier for Americans to think about and plan for retirement,” Polis said in a statement. “Nowadays, most Americans prefer their inbox to their mailbox. The RETIRE Act makes planning one-click away by giving employees online access to their retirement information.”

Not only does it make retirement information more accessible, he added, but it helps the environment and reduces costs by cutting back on wasted paper.

Outspoken American Retirement Association chief executive Brian Graff likes what he sees in the bill, taking to social media to proclaim ARA’s support.

“Bipartisan (yes I said, bipartisan) legislation introduced today to allow 401k participant communications to be delivered electronically,” Graff posted on LinkedIn on Tuesday. “The American Retirement Association strongly endorses this important legislation that would significantly reduce plan costs helping both plan sponsors and participants. We will be working hard in 2018 to try and get this issue finally addressed!”

“By encouraging savers to receive their retirement plan information online, this commonsense bill will lower administrative costs, provide more timely access to plan information and allow greater interaction with and personalization of retirement savings,” Congressman Roe noted. “At the same time, this legislation provides important consumer protections, allowing participants to opt out and receive paper statements at any time with no additional cost. I am proud to partner with Reps. Polis, Kelly and Kind to introduce this important piece of legislation.”

John Sullivan
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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.

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