After months of economic heartache from the coronavirus, it is encouraging to learn of some good news about Americans’ retirement security.
The Vermont Retail & Grocers Association (VRGA) and affiliates recently announced they are introducing a multiple employer 401(k) retirement plan (MEP) for their members. As a result, more employees at Vermont retailers will soon be able to save for retirement via a common workplace retirement plan.
The VRGA’s initiative follows a rule from the Department of Labor last year that makes it easier for small businesses in the same industry to band together and provide workplace retirement plans.
Workplace retirement accounts are extremely popular and effective. But not enough small businesses sponsor plans. Just 50 percent of civilian workers employed by businesses with fewer than 50 workers have access to a workplace retirement plan. And the economic upheaval caused by COVID-19 hasn’t made things any easier.
Small employers often do not offer workplace retirement plans due to the complexities and costs of setting up a plan. But when small businesses band together, they can obtain increased purchasing power in the marketplace for investment products and administrative services – making it more cost-effective.
That’s good news. But even better news is forthcoming, thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act.
Signed into law last December and strongly supported by life insurers, the SECURE Act contains several provisions designed to improve American workers’ financial security. One provision makes it even easier for small businesses to band together by modernizing the rules to allow “open” MEPs. This provision is ideal for small employers who don’t currently offer a retirement plan or have a “relationship” with other businesses.
As more MEPs are established across the country, more American workers will gain access to workplace retirement accounts. Indeed, the SECURE Act is expected to lead to at least 700,000 new savers nationwide.
Now there’s some much-needed good news about Americans’ retirement security!
Howard Bard is Vice President, Taxes and Retirement Security at the American Council of Life Insurers (ACLI). Howard helps guide ACLI policy on regulation and legislation affecting the retirement security business of its members. He has more than 20 years of experience in the practice of employee benefits law.