Senators Collins and Warner co-authored the bill to make it easier for small businesses to offer retirement plans
Washington, D.C. – U.S. Senator Susan Collins (R-ME) announced that a version of the SIMPLE Plan Modernization Act that she co-authored with Senator Mark R. Warner (D-VA) was signed into law as part of the government funding package. Th
e legislation will provide greater flexibility and access to small businesses and their employees seeking to utilize the popular SIMPLE plans as an option for saving for retirement.
“Increasing access to employer-sponsored retirement plans is one way to improve Americans’ financial security, yet approximately two out of every five Mainers in the private sector lack access to a retirement plan at work,” said Senator Collins. “The SIMPLE Plan Modernization Act is a win-win proposition that helps small businesses enhance their employee benefits and assists workers with taking steps to save for retirement.”
Congress established SIMPLE (Savings Incentive Match Plan for Employees) retirement plans in the Small Business Job Protection Act of 1996 to encourage small businesses to provide their employees with retirement plans. Retirement plans among small employers continue to be scarcer than among medium and large employers. While these smaller businesses have access to tax-favored retirement savings plans (including traditional 401(k)s), those plans are more expensive to administer.
Businesses with 100 or fewer employees may currently create SIMPLE retirement savings accounts for their employees, so long as the employers do not have another employer-sponsored retirement plan.
The SIMPLE Plan Modernization Act increases the contribution limit for SIMPLE plans. Increasing the limit will achieve two basic goals: 1) Encourage more small business employers to offer a retirement savings benefit to their employees and 2) Allow small business employees to save even more each year on a tax-deferred basis.
The new law will: