Bills making it easier for small businesses to offer 401(k)s by cutting costs and red tape are advancing in the Senate and the House this week.
The Senate Finance Committee passed the Retirement Savings and Enhancement Act on Wednesday, while the House Education and the Workforce Committee is scheduled to take the first step to pass similar legislation Thursday.
Finance Committee member Sen. Sherrod Brown, D-Ohio, said the Senate bill has the potential to dramatically increase the number of workers with payroll retirement savings plans by easing the way for small employers to join together to take advantage of economies of scale in workplace 401(k)s—the so-called open multiple-employer plans (Open MEPs).
Making it easier for small employers to offer retirement savings is important because only 20 percent of workers at companies with under 500 employees are in job-based retirement plans, while the number is four times greater for businesses with over 500 workers, noted Virginia Democrat Sen. Mark Warner, D-Va., who serves with Brown on the Senate finance and banking committees.
The Senate bill would also make it easier for employers to offer annuities.
In addition, the legislation would let savers contribute to IRAs for the first time past age 70 and a half.
“A lot of Americans are living longer. If they can afford to keep saving for retirement, they should be allowed to do so,” said Sen. Ron Wyden, D-Oregon, the lead Democrat on the Finance Committee.
Senate Finance Chair Orrin Hatch, R-Utah, said it is too early to tell if Open MEPs will become law this year.