New Universal Retirement Plan for Small Employers Proposed
SIMSBURY, CT, March 15, 2010 -- The SPARK Institute released a detailed proposal today for a new "Universal Small Employer Retirement Savings Program" ("USERSP") to help solve the retirement savings gap for millions of American workers, it was announced by Larry H. Goldbrum, General Counsel. "We recognize that many employers, especially small companies, have been reluctant to adopt retirement plans for their employees due to concerns about the cost and potential fiduciary liabilities," said Goldbrum. "To address these issues and help increase the opportunity for all workers to be covered by a retirement plan, The SPARK Institute developed the USERSP proposal to provide small employers with a robust, simple, and cost effective employer-based retirement savings plan alternative to the plans that are currently available and to the proposed mandatory payroll deduction IRA."
The proposal is available on the Institute's web site at http://www.sparkinstitute.org/comments-and-materials.php.
Among the key features of the USERSP, which may be offered by any employer with less than 100 employees, are:
- Automatic Plan Features - Required mandatory enrollment and contribution features unless employees opt out.
- Reasonable Contribution Limits - USERSPs would have lower contribution limits than 401k plans, but higher than IRAs so workers have reasonable opportunities to save enough for retirement.
- Simplified Investment Option Selection and Fiduciary Exposure - Plan options would be required to meet specific minimum requirements for broad based investment choices to protect employers and service providers from potential fiduciary liability. Investment options may be chosen by either the employer or determined by the service provider as part of its product offering.
- Simplified Administration - The plans would not be subject to discrimination testing in order to reduce compliance burdens and costs.
- Limited Plan Features to Prevent Savings Leakage - Loans would not be permitted and only safe-harbor hardship withdrawals would be allowed.
- Simplified Plan Documents - USERSPs would use a government approved prototype plan document to reduce administrative and compliance costs.
Goldbrum noted that the USERSP would have to be created through Congressional action and certain aspects would require changes to certain existing laws and regulations. "We are currently circulating the proposal to officials in the Obama administration, as well as lawmakers and the regulatory agencies that oversee retirement plans," he said.
The USERSP proposal was developed over the past few months with the active participation and support of the membership of The SPARK Institute, Goldbrum noted. The Institute represents the interests of a broad based cross section of retirement plan service providers and investment managers, including banks, mutual fund companies, insurance companies, third party administrators and benefits consultants. Through the combined expertise of its member companies, The SPARK Institute provides research, education, testimony and comments on pending legislative and regulatory issues to members of Congress and relevant government agency officials. Collectively, its members serve over 62 million participants in 401k and other defined contribution plans.
About The SPARK Institute
The SPARK Institute is the leading voice in Washington for the retirement services industry. Through the combined expertise of its member companies, The SPARK Institute provides research, education, testimony and comments on pending legislative and regulatory issues to members of Congress and relevant government agency officials. Collectively, its members serve over 62 million defined contribution plan participants, including more than 90% of all 403(b) plan participants.
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