Bipartisan legislation backed by the American Retirement Association would allow the expenses associated with plan design changes to be reimbursed from plan assets.
The Increasing Small Business Retirement Choices Act, introduced April 26 by Sens. Jacky Rosen (D-NV) and Tim Scott (R-SC), would amend existing law to allow small business employers to use retirement plan funds to pay expenses associated with retirement plan design changes, lowering the cost of providing better plans to workers. Currently, employers that offer 401(k) retirement plans and want to consider a plan design change, such as auto-enrollment or auto-escalation, must pay upfront out-of-pocket administrative costs.
Rosen and Scott are both members of the Senate Special Committee on Aging, the Senate Committee on Small Business and Entrepreneurship and the Senate Health, Education, Labor, and Pensions (HELP) Committee.
“Small businesses make up more than 99 percent of our state’s businesses and employ over half a million Nevadans. This bipartisan legislation will ensure small business workers have access to high-quality retirement plan benefits without facing a cost barrier,” said Rosen. “Removing this bureaucratic red tape and additional cost will make small businesses stronger and provide their workers with the best and most comprehensive retirement plans possible.”
“Retirement planning is often a daunting and complicated process for millions of people concerned about securing the future of their families,” said Scott, Ranking Member of the Senate Special Committee on Aging. “This bill will lighten the burden on workers at small businesses that do not always benefit from the same features of retirement plans under larger companies. Leveling the playing field to maximize benefits for the financial futures of all Americans should be a goal we can all get behind.”
“Innovative plan design features such as automatic enrollment and financial wellness programs have been shown to have a huge impact on American workers’ financial health and retirement security,” said Brian Graff, CEO of the American Retirement Association. “The expanded flexibility to cover the expenses associated with these programs means that more employers—and most particularly small business owners—will now be able to bring those advantages to even more workers.”