Only 22 percent of workers at small firms currently have access to a workplace savings plan or pension
Washington, D.C. — U.S. Sens. Susan Collins (R-ME), the Chairman of the Senate Aging Committee, and Mark Warner (D-VA), a member of the Senate Finance Committee, introduced bipartisan legislation that would reduce duplicative filing costs for small businesses looking to offer retirement plans to their employees and sole-proprietors.
“Americans simply aren’t saving enough to be able to afford a comfortable retirement. In fact, the Center for Retirement Research estimates that there is an estimated $7.7 trillion gap between what Americans have saved for retirement and what they will actually need,” said Sen. Collins. “We know that when employers provide their employees with access to retirement plans, approximately 80 percent of them contribute. Our legislation will help promote retirement security by making it easier and less expensive for small businesses to establish retirement plans, increasing their accessibility to employees and helping to ensure that those who worked hard for decades do not spend their retirement in poverty.”
“Increasing access to workplace retirement plans is a crucial step in providing a secure retirement to millions of Americans,” said Sen. Warner. “When workers have access to a retirement plan through their employer, nearly 80 percent choose to participate – compared to just 10 percent who do without access through their employers, according to the Bureau of Labor Statistics. As the nature of work continues to change, I am pleased to introduce this bipartisan legislation with Senator Collins to make it easier for small businesses to offer this important benefit to their employees.”
A 2016 report by the Pew Charitable Trusts found that only 22 percent of workers at small firms have access to a workplace savings plan or pension, compared to 74 percent at firms with 500 or more employees. For smaller employers, offering a retirement plan can be expensive and complex.
S. 3307 directs the Department of Labor (DOL) and the Treasury Department to allow employers and sole-proprietors participating in retirement plans administered the same way to file a single aggregated Form 5500, a required annual return that provides important compliance information to DOL and Treasury.
Under current law, despite sharing a common administrative framework, each individual plan is still required to file a separate Form 5500 to satisfy reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. S. 3307 will eliminate duplicative reporting by plan administrators, which will reduce costs for small businesses that maintain retirement plans. To file an aggregated Form 5500, the retirement plans would need to have the same trustee, fiduciary, plan administrator, plan year and investment menu.
To provide DOL and Treasury time to implement this change, the proposal has an effective date of no later than January 1, 2020. A copy of the legislative text is available here.