Lost in the great debate about President Obama’s 2014 budget, which would impose a $3 million limit on retirement accounts, was a proposal to require small employers to offer an auto-IRA for those not currently covered by a 401(k) plan. CFOs generally support the proposal, which defines small employers as those with less than $20 million in annual revenue.
They do have some reservations, however, including:
• Increased costs and administrative work
• The perception that a worker’s pay is being reduced
• Liability for mistakes – who is the fiduciary?
• Lack of detail
While ERISA provides very specific guidelines about the role of the employer, CFOs are concerned about whether they will be given sufficient guidance. One CFO suggested that 401(k)s be improved — for example, by creating a new tax credit for employers that offer investment education to plan participants.
