House Bill Seeks to Help Small Businesses Offer Retirement Plans

Bipartisan legislation has been reintroduced in Congress that seeks to encourage small businesses to offer retirement plans and make a variety of other changes to existing retirement law.

Reps. Ron Kind (D-WI) and Dave Reichert (R-WA), both senior members of the House Ways & Means Committee, reintroduced their Small Businesses Add Value for Employees (SAVE) Act (H.R. 4637) on Dec. 13. Among other things, the legislation would:

  • make changes to existing SIMPLE IRA and SIMPLE 401(k) retirement plans;
  • allow for open multiple-employer plans (MEPs); and
  • ease other requirements to make it easier for small businesses to offer plans to their employees.

Rep. Kind noted that he has been active on this issue since 2008, and the pair previously introduced similar legislation in 2015 and 2014.  In addition, the legislation includes similar provisions in the Retirement Plan Simplification and Enhancement Act of 2017 (RPSEA), the broad-based bill introduced Dec. 1 by Rep. Richie Neal (MA), the House Ways & Means Committee’s ranking Democrat, as well as provisions included in legislation introduced in the previous Congress by Senate Finance Committee Chairman Orrin Hatch (R-UT).

Key provisions of the SAVE Act include:

  • Removing the “common nexus” requirement to allow unrelated small businesses to pool together as part of an open MEP, provided that each employer has fewer than 500 employees.
  • Directing the Treasury Department to promulgate regulations providing relief from the one-bad-apple rule applicable to MEPs, such that a violation of the qualification rules by one participating employer will not result in the disqualification of the entire MEP.
  • Creating a new SIMPLE 401(k) deferral-only safe harbor for small employers that would require automatic enrollment of participants and allow for elective deferrals up to $10,000 (with no catch-up contributions). Plan loans would not be permitted and hardship distributions would only be available in limited circumstances.
  • Establishing a new automatic enrollment safe harbor under which the default contribution would be at least 6% in the first year and automatically escalate participants’ deferrals at a rate of 2% per year to 10% of pay. The safe harbor includes employer matching contributions for non-highly compensated employees equal to 100% on the first 1% of pay, 50% on deferrals between 1% and 6% of pay, and 25% on deferrals between 6% and 10% of pay.
  • Creating a new “automatic deferral IRA” arrangement that allows employers to automatically enroll eligible employees (defined as any employee that makes at least $5,000 per year) into a payroll deduction IRA arrangement. Participants would be automatically enrolled at 3% of pay with an automatic salary deferral escalation of 1% per year up to a maximum of 15% of pay (subject to the IRA deduction limits).
  • Reforming rules relating to SIMPLE IRA plans, including eliminating the current restrictions on rollovers from SIMPLE IRA plans to other retirement savings vehicles; allowing businesses to terminate SIMPLE IRA arrangements mid-year; eliminating the higher tax penalty on early SIMPLE IRA distributions; and increasing the SIMPLE IRA contribution limits to the levels allowed under full-blown 401(k) arrangements.
  • Requiring DC plans to include certain lifetime income illustrations on participants’ benefit statements showing the amount of annuity income that the participant could receive, as well as the participant’s current account balance.
  • Providing an annuity selection safe harbor in qualified plans designed to encourage lifetime income options in retirement.
  • Permitting individuals to use their preceding year’s taxable compensation instead of the current year for purposes of the IRA contribution limits.
  • Allowing a limited transfer of an unused balance contained in a flexible spending account to be rolled into a qualified retirement plan.

“By taking steps to make it easier for Wisconsin small businesses to offer their employees a retirement plan we level the playing field and set workers and businesses up for future success,” Rep. Kind said in introducing the legislation.

H.R. 4637 was referred to two House committees: Education and the Workforce and Ways & Means.

Add Your Comments


  1. Clark
    Posted March 13, 2018 at 12:41 pm | Permalink

    Is anyone aware of the status of this bill. It addresses some much needed SIMPLE IRA changes.

  2. Ted Godbout
    Posted March 13, 2018 at 2:20 pm | Permalink

    It’s still pending before the House Ways and Means, and Education and Workforce committees.

    Senator Hatch’s newly reintroduced RESA bill probably has the best chance for enactment this year, but it’s not out of the question that components of this legislation could get picked up if Congress were to act on retirement policy legislation this year. It’s really anyone’s guess at this point.

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