The senses. Hickenlooper and Collins introduce bill to help small businesses offer retirement plans

US Senators John Hickenlooper (D-CO) and Susan Collins (R-ME) last week introduced legislation to make it easier for small businesses to offer retirement plans to their employees.

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Retirement Savings Act to simplify the Small Business Retirement Savings Act would allow companies administering employer-sponsored group plans to have the option of using directed trustees, an industry standard for large corporations, as well as discretionary trustees. Currently, they do not have the ability to use directed trustees. This new option would expand the market for employer-sponsored group plans, giving small businesses more choice at a lower cost.

The bill would also simplify IRS filing for small business pension plans. Currently, small businesses with up to 100 employees have simplified IRS compliance requirements for their retirement plans, while those with more than 100 employees must adhere to a more complex filing process. This bill would apply the same streamlined process to any small business pension fund with up to 100 employees.

“Making it easier and more affordable for small businesses to offer retirement plans is key to helping many Americans prepare for their golden years,” Collins said. “In 2019, legislation I co-authored to reduce the cost and complexity of retirement plans was signed into law, expanding employee access to these savings options. Building on this effort, our bipartisan bill would make a significant difference in helping individuals save more for retirement.

Small businesses employ nearly half of America’s private sector workers. Yet, due to the complexity of regulations, only 53% of workers in small businesses have access to a pension plan, compared to 85% of employees in large companies.

“Small businesses don’t have the resources of big businesses, but we treat them the same when it comes to pension plans,” Hickenlooper said. “Reducing this bureaucracy will make it easier for employees to save for retirement and help level the playing field for local businesses.”

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