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Hickenlooper, Collins Bill to Cut Red Tape For Small Business Employee Retirement Plans Passes Committee

Jun 14, 2022

Washington, D.C. – Today, U.S. Senator John Hickenlooper’s and Susan Collins’ Simplifying Small Business Retirement Savings Act passed out of the Senate Health, Education, Labor and Pensions (HELP) Committee. The bill would make it easier for small businesses to access and offer retirement plans for their employees.

Small businesses employ nearly half of American private sector workers. However, due to costs and regulatory complexity, only 53 percent of workers at small businesses have access to a retirement plan compared to 85 percent of employees at larger companies.

“Outdated rules are stopping employees from saving and small businesses from offering retirement plans,” said Hickenlooper. “By getting rid of the red tape, this bill makes it easier to do both.”

“Making it easier and more affordable for smaller businesses to offer retirement plans is key to helping many Americans prepare for their golden years,” said Senator Collins. “In 2019, legislation I co-authored to reduce the cost and complexity of retirement plans was signed into law, expanding employees’ access to these savings options. I am pleased that Congress has taken another step toward passing this bipartisan bill Senator Hickenlooper and I introduced, which would make a significant difference in helping individuals save more for retirement.”

The bill passed out of the HELP Committee as part of the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act and next heads to a full vote in the Senate.

Specifically, Hickenlooper and Collins’ Simplifying Small Business Retirement Savings Act would modify two innovative types of retirement plans that are designed to make providing retirement plans easier and more affordable for small businesses.

  • Modify Pooled Employer Plans: Pooled Employer Plans, originally created by a provision authored by Collins, allow small businesses to pool their resources and purchase plans as if they were a single large company. 
    • Typically, companies offering retirement plans will pick between trustees of varying responsibility levels to manage plan assets based on what works best for each situation. However, Pooled Employer Plans inadvertently restrict providers to using one type of trustee, discretionary trustees.
      • This has limited the number of Pooled Employer Plans offered to small businesses.
      • The Simplifying Small Business Retirement Savings Act, would allow companies administering Pooled Employer Plans to have the option of using Directed Trustees, an industry standard for large companies, as well as Discretionary Trustees.
      • The new option would expand the marketplace for Pooled Employer Plans, giving small businesses more choices  at lower costs.

  • Simplify IRS Filing for Small Business Retirement Plans: Group of Plans allow small businesses to combine their resources while retaining more independence. Generally, businesses with fewer than 100 employers are subject to simplified IRS compliance requirements  for their retirement plans.
    • However when participating in  a Group of Plans, the retirement plan administrator is required to follow the filing process for larger companies, since the number of employees among the pooled small business surpasses 100.
    • The Simplifying Small Business Retirement Savings Act, would apply the same simplified process to any retirement plan pool that is made up of small businesses each of 100 employers or fewer.


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