Retirement Reform Bill Introduced by Sen. Hatch

July 17, 2013

pic-biz-ownerSen. Orrin Hatch (R-Utah) has introduced the Secure Annuities for Employee (SAFE) Retirement Act of 2013 (S. 1270).  He is the ranking member of the Senate Finance Committee and a member of the Senate Health, Education, Labor and Pensions Committee.

The legislation would make a wide variety of positive changes to the extraordinarily complex laws governing retirement plans. It would create a “starter 401(k) plan” that would, with minimum employer administrative expense, allow employees to contribute up to $8,000 annually.  The bill would increase the maximum small employer credit for retirement plan start-up costs to $5,000.  In general, the credit would be equal to 50 percent of the start-up costs.  The bill would eliminate the top-heavy rules that apply to qualified plans and simplify the non-discrimination and minimum participation rules.  The bill would not comprehensively reform the current qualified plan system.

According to the U.S. Small Business Administration (SBA) Office of Advocacy, almost 72 percent of workers in small companies have no retirement plan available through the company and an additional nine percent have a company-sponsored plan available but do not participate. Only 19.5 percent of workers in small private sector companies report participating in a retirement plan.

These unfortunate facts are primarily a function of the complexity, administrative cost and regulatory risk associated with maintaining a qualified retirement plan.  NSBA is seeking substantial simplification of the current rules governing qualified retirement plans.

To view a summary of the legislation, click here.

To view a copy of Sen. Hatch’s remarks on the Senate floor, click here.

To read NSBA testimony to the Senate Finance Committee on Promoting Retirement Security, click here.

To read a summary of SBA research on this topic, click here.