Legislation to reduce red tape for small businesses looking to offer retirement plans to their employees was introduced last week in the Senate and House.
The bill directs the Department of Labor (DOL) and the Treasury Department to allow employers and sole-proprietors to file a single aggregated Form 5500, a required annual return that provides important compliance information to DOL and Treasury.
Current law requires each individual plan to file a separate Form 5500 to satisfy reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code.
This bill would eliminate duplicative reporting by plan administrators and reduce costs for small businesses that maintain retirement plans. The legislation was introduced in the Senate by Sens. Mark R. Warner (D-VA) and Susan Collins (R-ME) and in the House by Reps. Linda Sánchez (D-CA) and Phil Roe (R-TN).
“As the nature of work continues to change, increasing access to workplace retirement plans is a crucial step in providing a secure retirement to millions of Americans,” Warner said. “For smaller employers, offering a retirement plan can be expensive and complex, so we should make it easier and reduce duplicative filing costs for them to offer retirement plans and promote retirement security for all workers.”
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.
“Americans simply aren’t saving enough to be able to afford a comfortable retirement. In fact, there is an estimated $7.7 trillion gap between what Americans have saved for retirement and what they will actually need,” Collins said. “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.”