21 June 2018

Legislation To Help Small Business Retirement Plans Introduced

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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 Congress.

To provide DOL and Treasury time to implement this change, the proposal has an effective date of no later than Jan. 1, 2021.

Click here for the original article from NAPA.

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