New Executive Order Seeks to Expand Small Business Access to Retirement Plans
Author: Robert S. Teachout, XpertHR Legal Editor
September 17, 2018
President Donald Trump has signed an Executive Order instructing the Department of Labor (DOL) and the Treasury Department to consider regulations to make it easier for small businesses to offer retirement savings plans. Some have claimed that complying with current requirements has made it difficult for small businesses to band together to offer association retirement plans (ARPs), sometimes referred to as multiple employer plans. The proposed changes would allow small businesses to pool their resources to provide employees a type of 401(k) plan.
The executive order instructs the DOL to study revising the regulations to make it easier for small businesses to show that they have a common interest in order qualify as a "bona fide association" eligible to offer an association retirement plan. The order also directs the Treasury Department to examine regulations setting minimum required distributions from 401(k) or IRA plans. It also seeks to lower the distribution requirements to allow retirees to continue accruing savings for a longer period of time.
Another feature of the proposed ARPs is that the retirement plans would move with employees from job to job. This would encourage more employees to enroll in the plans and save for retirement.
The White House said that changes are needed because only 53 percent of businesses with fewer than 100 employees offer a workplace-sponsored retirement plan. In contrast, 89 percent of companies with 500 or more employees offer retirement plans.
The new order was signed one day before new DOL regulations took effect giving small businesses the option to provide employee health insurance through association health plans. Regulations authorizing those plans were proposed following another Trump executive order signed in October 2017.