Obama to Urge Easing 401(k) Rules for Small Businesses
WASHINGTON — President Obama will propose in his 2017 budget new rules that would make it easier for small businesses to join together to form 401(k) retirement plans for their workers, even if the businesses are in different industries, administration officials said Monday.
The officials said that the proposal, if accepted by the Republican-led Congress, could make retirement plans available to more people by reducing administrative costs and compliance issues, which are sometimes too great for a single small business to bear.
“We need to find new ways to help working families build up a nest egg,” said Jeffrey D. Zients, the director of Mr. Obama’s National Economic Council. He said that retirement plans were not currently available to more than half of all workers at businesses that employ fewer than 50 people.
Mr. Zients said that retirement plans were “an important component of attracting and retaining workers,” and that he was optimistic that both Republicans and Democrats on Capitol Hill would support the president’s proposals.
Small businesses can already band together to form a retirement plan, though officials said that current law discourages them from doing so if the businesses are not closely related. They noted that some independent auto dealerships have united to create retirement plans for their workers, allowing the businesses to share costs.
Mr. Zients and Labor Secretary Thomas E. Perez said the president would propose specific legal changes to promote the broader use of the program, often called an open multiple employer plan. Officials said the changes would clarify “decades of precedent, both case law and guidance,” that currently stands in the way of such plans.
In addition to the 401(k) proposal, Mr. Obama’s budget will include other modest retirement initiatives, including one that would require businesses with more than 10 employees to automatically enroll their workers in an individual retirement account, known as an I.R.A., if the businesses do not offer a separate retirement savings program.
That proposal has been part of the president’s budget in the past, but officials said they hoped Republicans would support it this time. The budget will also seek funding for pilot programs that would provide new ways for people who change jobs to shift their retirement savings into programs offered by their new employers.
This article was originally published at the NY Times.