Bipartisan legislation has been
introduced in the U.S. House and Senate to make it easier for small businesses
to offer retirement plans – or at least easier to file Form 5500.
The bill directs the Department
of Labor (DOL) and the Treasury Department to allow employers and sole
proprietors participating in retirement plans administered in the same way to
file a single, aggregated Form 5500.
The legislation was introduced in
the Senate by Sens. Mark R. Warner (D-VA), a member of the Senate Finance
Committee, and Susan Collins (R-ME), who chairs the Senate Special Committee on
Aging. The House version was sponsored by Reps. Linda Sánchez (D-CA), a member
of the Committee on Ways & Means, and Phil Roe (R-TN), a member of the
Committee on Education and the Workforce.
Aggregated Form 5500
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
ERISA and the Internal Revenue Code. The sponsors of the bill say it 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 have to share the same trustee, fiduciary,
plan administrator, plan year and investment menu.
According to the bill’s sponsors,
the self-employed, including sole proprietors and small business owners, are
the most likely to establish a retirement savings plan that would benefit from
and meet the requirements necessary to file an aggregated Form 5500. The
sponsors cite 2016 survey findings from the Transamerica Center for Retirement
Studies, in collaboration with the Aegon Center for Longevity and Retirement,
that found that only one-third of self-employed respondents indicated that they
make sure they are saving for retirement.
The legislation was unanimously
approved by the Senate Finance Committee in the previous (114th) session of
To provide DOL and Treasury time
to implement this change, the proposal has an effective date of no later than
Jan. 1, 2021.
here for the original article from NAPA.