Rep. Richard Neal (D-MA) recently introduced two key bills in Congress affecting retirement plans. On May 16, Neal introduced the Automatic IRA Act of 2013 (H.R. 2035), which would require employers with more than 10 employees to enroll their workers in IRAs via an automatic payroll deduction arrangement. Employees could opt out of the arrangement, and there is no requirement for employers to contribute to employees’ IRAs.
The bill would create a new federal debt security called an “R-bond” which would be the default investment option for employees should an employer not elect to use a private sector service provider to administer the arrangement.
ASPPA supports the concept of automatic IRAs for two reasons. First, payroll deduction retirement savings works. And second, requiring small business owners to provide some form of retirement savings will encourage them to consider a more robust arrangement.
On May 22, Rep. Neal introduced the Retirement Plan Simplification and Enhancement Act of 2013 (H.R. 2117). Five proposals developed by ASPPA’s Government Affairs Committee were included in this comprehensive legislation. The provisions would:
• allow employers to adopt a qualified retirement plan up until the due date of tax filings for the year;
• allow the top heavy testing rules to be applied separately to employees who have not met statutory age and service requirements;
• modify the automatic enrollment safe harbor to remove the 10% automatic escalation cap;
• allow insurance contracts to be rolled over to IRAs; and
• allow the use of forfeitures to fund safe harbor contributions.
Andrew J. Remo is ASPPA’s Congressional Affairs Manager.
