CEO DATELINE - Labor Department unveils proposed rule for association retirement plans
CEO DATELINE - Labor Department unveils proposed rule for association retirement plans
- October 23, 2018 |
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Walt Williams
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The U.S. Department of Labor has released a proposed rule that would make it easier for businesses to join together through associations to offer retirement plans to their employees.
The rule announced Monday would allow the creation of "association retirement plans" offered by associations of employers in a city, county, state or a multi-state metropolitan area, or in a particular industry nationwide, according to a DOL news release. Sole proprietors and their families would also be permitted to join such plans. http://bit.ly/2CwunZS
Such arrangements already exist in the form of multiple-employer plans, which can include members of a trade association, the Wall Street Journal reported. The proposed rule would loosen existing restrictions so a larger number of business groups could offer retirement plans.
The Trump administration proposal is similar in concept to a separate rule issued earlier this year allowing small businesses to band together through associations to purchase employee health insurance. The general idea behind both rules is that by joining together, small businesses would be able offer benefit packages comparable to those offered by large employers.
"Many small businesses would like to offer retirement benefits to their employees but are discouraged by the cost and complexity of running their own plans," Labor Secretary Alexander Acosta said in a statement. "Association retirement plans give these employers a simple and less burdensome way to offer valuable retirement benefits to their employees."
An association sponsoring a 401(k) plan would serve as the fiduciary and have responsibility for setting up and running the plan, a DOL official told the Wall Street Journal. However, employers would retain fiduciary responsibility for selecting the plan and would be free to decide whether to offer matching contributions. https://on.wsj.com/2AmPIDD
The proposed rule would also allow plans to be sponsored through professional employer organizations, which are human-resource companies that contractually assume certain employment responsibilities for their client employers.
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