As Fiduciary Rule Advances, Lawmakers Pore Over Retirement Plan Access

The Department of Labor (DoL) presented a fiduciary proposal aimed at strengthening the retirement system, primarily by expanding access to employer-sponsored savings plans. In response, the Senate Finance Committee convened a hearing to discuss various proposals and the House has made some momentum toward blocking or delaying the DoL’s proposal.

The expansion of employer-sponsored retirement plans has seen bipartisan support, and senators have focused on less contentious tweaks to the blueprint.

Challenges for Small Businesses and Small Business Employees

Orrin Hatch, Finance Committee Chairman, stresses the importance of retirement policy to financial security and explains that most Americans depend on participation in a retirement plan through their jobs.  Many small businesses, however, do not sponsor plans for employees, leaving a large portion of the workforce stranded. The challenges facing small businesses looking to offer retirement plans to their employees include cost, complexity, and the administrative and regulatory burdens of sponsoring a plan.

Solutions

One course that could ease the administrative and financial burden for small business owners would be to allow businesses to come together to offer access to pooled 401(k) plans, known as multi-employer plans. Hatch is working on such legislation with other committee members including Ron Wyden. The White House has also endorsed the proposal and will include it in President Obama’s budget request for fiscal 2017.

The workforce’s increase in freelancers, independent contractors, and part-time workers has sparked Obama to roll out the myRA savings plan in conjunction with the Treasury Department. Lawmakers have expressed support for the agenda, citing the fact that today’s workers will likely work for multiple employers throughout their careers. Alicia Munnell, director of the Center for Retirement Research at Boston College, urged for mandatory enrollment plans that would create participation by default and allow workers to opt-out.

The White House’s Office of Management and Budget now has 90 days to review the rule. Fiduciary experts anticipate a quick turnaround to finalize the proposal, a grace period for advisors adjusting to the new rules, and full compliance being required by the end of Obama’s term.

Washington, D.C. Retirement Planning and Fiduciary Services with Cohen & Burnett

Cohen & Burnett has offered estate planning, fiduciary services, and retirement planning in Washington, D.C. for over 25 years. To learn more about our services and our trusted team of attorneys, please visit our homepage.

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