Congress made it easier for small businesses to offer a workplace retirement plan to their millions of employees by passing the Setting Every Community Up for Retirement Enhancement (SECURE) Act Thursday.
The president is expected to sign the provision, part of a larger budget bill, today.
The act's provisions included in Congress' appropriations package were approved with the passage of a continuing resolution to fund the federal government. One of those provisions would make it easier to include annuities in retirement plans.
“Congress and the President are about to deliver a meaningful, positive benefit to millions of American workers by expanding opportunities to save for and achieve a dignified retirement," said Wayne Chopus, president and CEO of the Insured Retirement Institute.
The bill also expands opportunities for workers to obtain guaranteed lifetime income products, increases the age at which required minimum distributions must be taken from retirement accounts and repeals the age limit for IRA contributors – all of which can help ensure that retirees do not outlive their retirement savings.
Additionally, the SECURE Act will require that plan participants receive an illustration of how much monthly income their retirement savings will provide which can help them plan to increase their retirement savings.
Nationwide – one of the largest insurance and financial service providers in the United States – applauds this bipartisan legislation, as it is a significant step forward for the retirement system and was more than a decade in the making.
"The SECURE Act is a much-needed and highly anticipated step in creating new pathways to retirement security. We have new opportunities today to protect people, businesses and futures in proven and innovative ways," said John Carter, president and COO of Nationwide Financial.
Emphasizing the importance of this legislation, according to Nationwide's recent business owner survey, 80% of small business owners believe the SECURE Act will allow them to offer a 401(k) plan that rivals those offered at large corporations.
Among those who are familiar with the SECURE Act, 84% believe the legislation should make it easier for small business owners to offer a 401(k). In addition, nearly nine in 10 agree that the legislation provides both their business and employees tax advantages (88%), helps attract and recruit top talent (88%) and helps improve employee retention (86%).
"With record low unemployment rates making it harder for small businesses to retain top talent, paired with America's growing retirement preparedness challenge, the SECURE Act offers a solution for making workplace retirement plans easier to offer: open Multiple Employer Plans (MEPs). MEPs allow small businesses to pool their resources to offer a workplace retirement plan that is cost effective and administratively simpler," Carter added.
For the past decade, Nationwide has engaged with lawmakers on additional legislative reforms to ensure private-sector small businesses' needs are addressed and their employees are supported. As part of the retirement reform discussions, Nationwide helped to develop the open MEPs concept that is a key part of the SECURE Act.
In addition to MEPs, the passage of the SECURE Act also advances a provision that provides small business owners a financial incentive to offer their employees a plan, thus increasing American workers' access to workplace retirement plans. The legislation provides an annual tax credit that covers up to $5,000 of plan costs for the first three years that an employer offers a workplace retirement plan.
"Nationwide is a strong supporter of enhancements to our retirement system that enable and protect the future for Americans and small businesses. We applaud Congress for the bipartisan support of this legislation and urge the president's swift signature," Carter said.
Carter added the company will be working with firms and advisors during the implementation phase of the new provisions.