Source: United States Senator for South Carolina Tim Scott
Legislation would reduce administrative barriers to improve retirement plans for workers at small businesses
WASHINGTON – This week, U.S. Senators Tim Scott (R-S.C.) and Jacky Rosen (D-Nev.) introduced the Increasing Small Business Retirement Choices Act, bipartisan legislation that would make it easier for small businesses to offer more comprehensive retirement benefits to their workers by reducing administrative expenses. Both senators are members of the Senate Special Committee on Aging; the Senate Committee on Small Business and Entrepreneurship; and the Senate Health, Education, Labor, and Pensions Committee.
“Retirement planning is often a daunting and complicated process for millions of people concerned about securing the future of their families,” said Senator 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.”
“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 Senator 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.”
“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.”
Currently, employers who 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, even if such changes might help employees save more money. This bill would change 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.
Read full text of the bill here.
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