Millions of additional Americans would have access to work-sponsored retirement plans under a Labor Department rule to be placed in the Federal Register on Monday, senior department officials told The Daily Signal.
Association retirement plans will expand access to 401(k) plans to employees of small businesses who currently don’t have a retirement plan, as well as to self-employed people, the officials said.
Allowing multiple employers to join forces to offer a retirement plan for employees is similar to the Labor Department’s rule on association health plans that increased access to health insurance plans.
Two types of organizations could establish such a 401(k) plan—a professional industry organization, such as the National Restaurant Association, or a regional or local group, such as a municipal or county chamber of commerce.
That could enable employees of restaurants or other industries that are members of a national group to pay into the national group’s 401(k) plan. If a local chamber of commerce establishes a group 401(k) plan, then any business in that locality could join to offer plans for their employees.
President Donald Trump issued an executive order on Aug. 31 asking the Labor Department to look at ways to make it easier for small companies to offer retirement plans for employees.
Last year, slightly more than half—53 percent—of employees at private-sector companies with fewer than 100 employees had access to employer-sponsored retirement plans, according to the White House. That compares with 89 percent of employees with retirement plans at companies with 500 or more employees.
According to the White House, a Pew survey found that 71 percent of small and midsized companies that don’t offer plans cite high costs as a reason.
Sens. Orrin Hatch, R-Utah, and Ron Wyden, D-Ore., co-sponsored legislation for a more expansive plan. But the Labor Department rule, an interpretation of existing law, is more limited.
The rule will be open for public comment. During that time, Labor Department officials said there will be a regulatory-impact analysis to determine how many workers and companies would be affected.