Obama proposes expansion of employee retirement plan options

by Tim Gould

The Obama administration is proposing some new ways to get employees involved in saving for retirement.  

The retirement proposals are part of an economic security agenda Obama outlined in his recent State of the Union address.

The president’s plan will involve a number of legislative proposals, which he’s expected to outline in the 2017 budget he’ll submit to Congress next month.

Here are the key parts of the proposal, as outlined in a fact sheet issued by the White House:

• Make it easier for employers to create pooled 401(k) plans to lower cost and burden. Multiple employer plans (MEPs) already allow employers with a “common bond” to form a pooled retirement plan, offering benefits through the same administrative structure but with lower costs and less compliance burden than if each employer offered a separate plan. In his upcoming budget, the president will for the first time propose to remove the “common bond” requirement, enabling employers to take advantage of “open MEPs” while adding significant new safeguards to ensure workers are protected. As a result, more small businesses should be able to offer cost-effective, pooled plans to their workers, and certain nonprofits and other intermediaries will be able to create plans for contractors and other self-employed individuals who don’t have access to a plan at work. As an added benefit, if an employee moves between employers participating in the same open MEP, or is an independent contractor participating in a pooled plan using the open MEP structure, he can continue contributing to the same plan even if he starts work for a different company.

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