Sens. Warner, Collins Introduce Legislation to Boost Retirement Saving Plans for Small Businesses
"The changing nature of work has redefined the employee-employer dynamic, making it harder for small businesses to offer traditional safety net protections for workers," said
"In my home state of
Businesses with 100 or fewer employees may currently create SIMPLE retirement savings accounts for their employees, so long as the employers do not have another employer-sponsored retirement plan.
The proposed legislation would increase the contribution limit for SIMPLE plans. Increasing the limit would achieve two basic goals: 1) Motivate more small business employers to offer a retirement savings benefit to their employees and 2) Allow small business employees to save even more each year on a tax-deferred basis.
The SIMPLE Plan Modernization Act would:
1. Raise the contribution limit for SIMPLE plans from
2. Give businesses with 26 to 100 employees the option of the higher contribution limits, and, in order to continue to encourage them to transition to 401(k)s when they can do so, increase their SIMPLE plan mandatory employer contribution requirements by one percentage point if they elect the higher limits.
3. Allow for a reasonable transition period for employers who hire additional employees above 25.
4. Make the limit increases unavailable if the employer has had another defined contribution plan within the past three years (to encourage businesses that already have qualified plans to retain them).
5. Modernize SIMPLE plan form filing requirements and modify the transition rules from SIMPLE plans to traditional plans to facilitate and encourage such transitions.
6. Direct
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