Washington, D.C. — In an effort to make it easier for Americans to save the money they will need for retirement, U.S. Senator Susan Collins (R-ME), the Chairman of the Senate Aging Committee, and Senator Bill Nelson (D-FL) introduced the Retirement Security Act today. Their bipartisan legislation would help small businesses offer retirement plans to their employees and encourage individuals to save more for retirement.
“As the Chairman of the Senate Aging Committee, ensuring that more people are better prepared for retirement is one of my top priorities,” said Senator Collins. “Our bipartisan legislation would significantly improve the financial security of many Americans by reducing the cost and complexity of retirement plans, especially for small businesses, and encourage individuals to save more for retirement.”
“Too many Floridians aren’t saving enough for retirement,” Senator Nelson said. “This bill will make it easier for folks, especially those working at small businesses, to start saving more now so they’re better prepared when they retire.”
According to the non-partisan Center for Retirement Research, there is an estimated $7.7 trillion gap between the savings American households need to maintain their standard of living in retirement and what they actually have. A recent Gallup poll found that only 54 percent of working Americans believe that they will have enough money to live comfortably in retirement.
The Retirement Security Act would address this issue by:
- Enabling more businesses to join multiple employer plans (MEPs) to offer retirement programs to their employees. The bill would allow businesses to share the administrative burden of a retirement plan, which helps lower costs, without requiring a connection, or “nexus,” between them.
- Making MEPs a more attractive option for small businesses. The bill would protect members of a MEP from losing their tax benefits if one employer in a MEP fails to meet the minimum criteria necessary for retirement plans to obtain tax benefits.
- Reducing the cost of maintaining a retirement plan. The bill would direct Treasury to simplify, clarify, and consolidate required notices to lessen costs.
- Encouraging those still in the workforce to save more for retirement. The bill would prevent the IRS from challenging the tax benefits of plans that provide employees with an employer match on contributions of up to ten percent of their pay.
- Ensuring that current measures to encourage savings are functioning as they were intended. The bill directs Treasury to make the “saver’s credit,” which reduces the tax burden on low- and middle-income individuals who contribute to retirement plans, available on Form 1040 EZ.